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Should You Invest in the VanEck Vectors Rare Earth/Strategic Metals ETF (REMX)?

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Looking for broad exposure to the Materials - Rare Earth/Lithium segment of the U.S. equity market? You should consider the VanEck Vectors Rare Earth/Strategic Metals ETF (REMX - Free Report) , a passively managed exchange traded fund launched on 10/27/2010.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Rare Earth/Lithium is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.

Index Details

The fund is sponsored by Van Eck. It has amassed assets over $216.70 M, making it the largest ETF attempting to match the performance of the Materials - Rare Earth/Lithium segment of the U.S. equity market. REMX seeks to match the performance of the MVIS Global Rare Earth/Strategic Metals Index before fees and expenses.

The 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.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.57%, making it the least expensive product in the space.

It has a 12-month trailing dividend yield of 3.16%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, China Molybdenum Co Ltd (603993 CH) accounts for about 7.41% of total assets, followed by Eramet (ERA FP) and Zhejiang Huayou Cobalt Co Ltd (603799 CH).

The top 10 holdings account for about 61.94% of total assets under management.

Performance and Risk

The ETF has lost about -8.61% and was up about 64.94% so far this year and in the past one year (as of 05/11/2018), respectively. REMX has traded between $16.76 and $32.55 during this last 52-week period.

The ETF has a beta of 1.36 and standard deviation of 25.53% for the trailing three-year period, making it a medium risk choice in the space. With about 21 holdings, it has more concentrated exposure than peers.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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