REXC targets rare earth element miners and processors outside China, betting that Western governments will subsidize domestic production to break Beijing's stranglehold on these critical materials used in EVs, wind turbines, and defense systems.
How It Works
The fund holds companies involved in rare earth mining, processing, and recycling, excluding all Chinese firms. It likely overweights established producers like Lynas (Australia) and MP Materials (US) while including development-stage projects in friendly jurisdictions. Geographic concentration in Australia, North America, and potentially Africa reflects where non-Chinese deposits exist.
Key Features
- Pure-play exposure to the West's attempt to build rare earth supply chains independent of China
- Captures both operating mines and development projects racing to fill the supply gap
- Benefits directly from government subsidies and defense contracts driving the reshoring trend
Risks
- China controls 90% of processing capacity and could crash prices to kill competitors, as they've done before
- Most non-Chinese projects are years from production with massive technical and financing risks
- Extreme concentration risk — probably holds fewer than 20 stocks in a highly speculative sector
Who Should Own This
Best for investors making a specific geopolitical bet that Western governments will spend whatever it takes to secure rare earth supplies, even at uneconomic prices. Works as a 1-3% satellite position for those who believe the energy transition creates a multi-decade demand supercycle that China can't satisfy alone.