Sprott Energy Transition Materials ETF

SETM

Market cap $705M

Given how geopolitical risks and energy prices have rattled markets over the past few months, broad commodity allocations have offered an increasingly attractive value proposition as of late.

Registered investment advisors did not pull back on exchange-traded funds in the first quarter of 2026. They kept adding them, according to AdvizorPro's Q1 2026 Quarterly RIA ETF Trends Report.

The pace of innovation in the ETF industry is hitting breakneck speeds. We have already seen more than 450 new launches in 2026, part of a massive wave of fresh products testing the waters.

China's dominance in critical mineral refining is becoming an increasingly important geopolitical and economic risk. Market capitalizations across the sector could create unusual opportunities.

SETM is up roughly 135% trailing twelve months on a basket of mining and refining names tied to uranium, copper, lithium, rare earths, and silver. China expanded rare earth export controls to twelve elements last fall; the Pentagon took a 15% equity stake in MP Materials with a price floor. SETM offers broad allies-weighted exposure at 65 basis points, but volatility is real with a 1.39 beta and a 43% max drawdown since inception.

Sprott Critical Materials ETF offers diversified exposure to critical materials, with strong thematic ties to nuclear, copper, and lithium demand. SETM's portfolio is well-positioned to benefit from the electrification megatrend, with significant allocations to uranium, copper, and lithium producers. Risks include commodity price volatility, supply chain disruptions, and weather-related production risks, but SETM's diversification mitigates single-material exposure.

Sprott Critical Materials ETF offers concentrated exposure to key energy transition metals, with overweight positions in uranium, copper, and lithium. SETM has delivered a 155% 1-year total return, benefiting from commodity supercycle dynamics and supportive supply-demand imbalances in critical materials. Issuing a long-term Buy rating, I view SETM as a premier vehicle for pure-play miners amid projected supply deficits and rising demand from electrification and AI.

While gold has proved to be a hot commodity for the last few months, some naysayers have looked at March's short-term volatility as a reason to stay away from the precious metal for now.

Rare earth elements (REEs) and critical materials, despite their sometimes interchangeable use, represent two distinct investment opportunities. Understanding the nuances can help investors navigate the strategic shifts in 2026, which include geopolitical uncertainty.

In recent months, there has been a lot of discussion about the importance of amplifying the domestic production and supply chains for rare earths in the United States. Given that China maintains a significant hold over the global market, the U.S. looking to increase its own rare earths presence makes a good deal of sense.