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These Materials ETFs Rally on Russia-Ukraine Crisis

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Oil is rallying hard on the Russia-Ukraine crisis.Oil breached $100 for the first time since 2014. Russia is energy-rich and Europe is highly dependent on Russia for energy, importing about 40% of its energy requirement. If Russia tensions increase, gas prices in Europe — which soared to new highs last year — will go up further as Russia is the provider of about 35% of Europe’s gas.

United States Brent Oil Fund, LP (BNO - Free Report) added 10.8% past week amid heightened tensions in East Europe. However, it’s not only oil that has been getting a boost from the crisis. The disruptive metals industry is following the suit. Ukraine is a major producer of uranium, titanium, iron ore, steel, and ammonia too. And the country’s steel makes up around 10% of Europe’s imports.

As the conflict worsens with harsh sanctions being imposed on Russia by the West, counter sanctions are likely in the coming days. These could hit supply chains and send the commodity market soaring, pushing inflation higher. In any case, the solar industry (which needs the usage of several disruptive metals) itself has been thriving with an upward potential.

Natural uranium and low-enriched uranium are used as fuel for nuclear power reactors, research reactors, military plutonium production and naval propulsion reactors. Highly enriched uranium can power naval propulsion, military plutonium, tritium production reactors, and act as feedstock for nuclear weapons production.

Titanium alloys are also widely used in military applications for everything from aircraft parts to missile housings, armor plating, and naval ship and spacecraft construction. Several civilian applications also use titanium. Steel is the backbone of any civilization. This explains why disruptive metal companies have been surging higher.

Below we highlight a few materials ETFs that have been stayed strong amid the Russia-Ukraine crisis.

ETFs in Focus

SPDR S&P Metals & Mining ETF (XME - Free Report) – Up 28.3% Past Month

The S&P Metals & Mining Select Industry Index represents the metals and mining sub-industry portion of the S&P Total Market Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, American Stock Exchange, NASDAQ National Market and the NASDAQ Small Cap exchanges. The Metals & Mining Index is a modified equal-weight index. The fund charges 35 bps in fees.

Sprott Gold Miners ETF (SGDM - Free Report) – Up 17.2% Past Month

The underlying Solactive Gold Miners Custom Factors Index aims to track the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges. The fund charges 50 bps in fees.

VanEck Steel ETF (SLX - Free Report) – Up 15.2% Past Month

The underlying NYSE Arca Steel Index tracks the overall performance of companies involved in the steel sector. The fund charges 56 bps in fees (read: Sector ETFs to Benefit/Lose as Oil May Hit $120 Soon).

VanEck Rare Earth/Strategic Metals ETF (REMX - Free Report) – Up 13% Past Month

The underlying MVIS Global Rare Earth/Strategic Metals Index tracks the overall performance of companies involved in producing, refining, and recycling of rare earth and strategic metals and minerals. The fund charges 59 bps in fees.

iShares MSCI Global Metals & Mining Producers ETF (PICK - Free Report) – Up 11.6% Past Month

The underlying MSCI ACWI Select Metals & Mining Producers Ex Gold & Silver Investable Market Index measures the equity performance of companies in both developed and emerging markets that are primarily involved in the extraction and production of diversified metals, aluminum, steel and precious metals and minerals, excluding gold and silver. The fund charges 39 bps in fees.

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