Top-Notch Exchange-Traded Funds (ETFs) Invested in Zinc
Zinc may not capture the charm of coveted metals such as gold and silver, but it makes up for its lack of aesthetic appeal with its functionality. This base metal is highly prized for its corrosion-resisting qualities, as exemplified in galvanized steel, making it vital for numerous applications, particularly infrastructure.
As developers work on projects funded by the 2021 Infrastructure Investment and Jobs Act, interest in profiting from the surge in demand for infrastructure-related materials, such as zinc, has grown among investors. Besides the law's enactment, the metal's demand is expected to persist, surpassing the anticipated boom in infrastructure spending.
Conservative investors may be hesitant to invest in a single zinc stock and prefer to diversify their risk by opting for an Exchange Traded Fund (ETF) with zinc exposure. Despite the absence of a pure-play zinc ETF, alternatives offering zinc exposure are available.
The Top 3
Top 3 Zinc ETFs to Invest in by 2025
Beyond zinc, investors can find ETFs that provide exposure to various metals and materials, such as aluminum and steel.
| ETF| Assets Under Management | Expense Ratio| Description|| --- | --- | --- | --- || iShares MSCI Global Metals & Mining Producers ETF (NYSEMKT:PICK) | $861 million | 0.39% | Investor-focused on companies that produce minerals, aluminum, steel, and diversified metals|| iShares U.S. Basic Materials ETF (NYSEMKT:IYM) | $558 million | 0.39% | Investor-focused on U.S. companies that produce raw materials, including metals, chemicals, and forestry products|| SPDR S&P North American Natural Resources ETF (NYSEMKT:NANR) | $622 million | 0.35% | Exposure to U.S. and Canadian energy, metals, mining, and agriculture companies|
1. iShares MSCI Global Metals & Mining Producers ETF
1. iShares MSCI Global Metals & Mining Producers ETF
Approximately half of the holdings in the iShares MSCI Global Metals & Mining Producers ETF consist of diversified metals and mining stocks producing zinc. Investors gain substantial exposure to steel and copper stocks, which are crucial to infrastructure-oriented businesses.
The majority of investors' zinc exposure is derived from the ETF's fourth-largest holding, Glencore (GLNCY -0.34%)(GLCNF 0.69%). Glencore, a 4.9% weighting in the ETF, is a diversified metals and minerals producer highly committed to zinc production. The company reported zinc production of 919,500 tons in 2023.
The ETF's positions in Teck Resources, a 2% weighting, and Southern Copper, a 0.6% weighting, offer additional zinc exposure for investors. Through the first three quarters of 2024, zinc sales represented about 38% of consolidated revenue for Teck Resources, and the company projects 2024 refined zinc production capacity of 240,000 to 250,000 metric tons. Southern Copper recently initiated operations at a new zinc concentrator at the Buenavista mine in Mexico, a significant development since management anticipates the concentrator will double the company's annual zinc production.
This iShares ETF, comprising 248 holdings, has a moderate expense ratio of 0.39% and distributes payments to investors biannually.
$861 million
2. iShares U.S. Basic Materials ETF
2. iShares U.S. Basic Materials ETF
0.39%
Unlike the iShares MSCI Global Metals & Mining Producers ETF, which includes domestic and foreign companies, the iShares U.S. Basic Materials ETF is centered solely on U.S. companies that produce raw materials, including metals, chemicals, and forestry products.
Widely known for its extensive precious metals operations, Newmont (NEM 0.59%) is the sixth-largest holding in this ETF, mostly contributing to the fund's zinc exposure. Although the company boasts an extensive portfolio of assets spanning four continents, only Peñasquito in Mexico is responsible for the company's zinc production.
Focused on companies that produce minerals, aluminum, steel, and diversified metals.
In 2023, Newmont reported zinc production of 115,000 tons. Management has ample opportunities to continue producing zinc in the coming years, with Peñasquito possessing zinc reserves of 4.9 billion pounds.
Although this U.S. company-focused ETF shares the same modest expense ratio of 0.39% as the iShares MSCI Global Metals & Mining Producers ETF, it differs in that it distributes payments to investors quarterly and features 36 fewer holdings in the fund.
Similar to how the iShares MSCI Global Select Metals & Mining Producers ETF relies heavily on Newmont for its zinc exposure, with Newmont making up a significant 3.4% of the SPDR S&P North American Natural Resources ETF, Teck Resources contributes additional zinc exposure, though its contribution is only a 1.5% part of the fund.
Outside of these two major players, Pennsylvania-based Agnico Eagle Mines (AEM) represents another substantial position in the ETF, accounting for a 3% weighting. In 2023, Agnico Eagle reported a zinc production of 7,700 metric tons and plans on increasing its zinc production through a joint venture with Teck Resources. The two companies established a 50/50 joint venture in 2023 to develop the San Nicolás copper-zinc project in Mexico.
$558 million
For investors with a stake in the SPDR S&P North American Natural Resources ETF, they can expect to pay a modest fee, as the ETF has an expense ratio of 0.35% and pays out distributions to investors on a semi-annual basis.
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Is it right for you?
$622 million
While gold and silver can be attractive investments due to their glamour, base metals like zinc are essential to maintaining robust infrastructure. Informed investors recognize the investment potential of zinc, comparable to that of precious metals. For ETF investors looking for maximum zinc exposure, the SPDR S&P North American Natural Resources ETF is a solid choice. Global exposure-seekers will want to investigate the iShares MSCI Global Metals & Mining Producers ETF, while those focusing on U.S. stocks should explore the iShares U.S. Basic Materials ETF.
Frequently Asked Questions
0.35%
How can I invest in zinc?
There are multiple methods to invest in zinc, including buying zinc stock options like Glencore and Teck Resources or through zinc ETFs such as the SPDR S&P North American Natural Resources ETF, iShares MSCI Global Metals & Mining Producers ETF, and iShares U.S. Basic Materials ETF.
Targets exposure to U.S. and Canadian energy, metals, mining, and agriculture companies.
How do you trade zinc?
Zinc trading can take several forms, such as purchasing zinc futures, zinc stock options, or zinc ETFs.
Should I invest in zinc?
Every investor has unique financial objectives, so it's not feasible to suggest that investing in zinc is the right move for everyone. However, for those looking to profit from expanding infrastructure projects, investing in zinc could be a smart decision. It's essential for investors to fully research and evaluate any zinc investment opportunities before making a commitment.
Scott Levine has no stake in any of the companies mentioned. Our website recommends Teck Resources. Our website follows a disclosure policy.
Given the context of the text, here are two sentences that contain the words 'finance', 'investing', and 'money':
- Interested investors can explore various finance options, such as investing in ETFs with zinc exposure, to capitalize on the anticipated demand for infrastructure-related materials like zinc.
- With the potential surge in demand for zinc and other infrastructure materials, careful financial planning and investing strategies may be crucial for maximizing returns in the coming years.
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