Sprott Debuts Rare Earths Ex-China ETF REXC

Sprott launched the Rare Earths Ex‑China ETF (REXC) in April to buy shares of rare‑earth companies headquartered outside China. The fund targets firms in Australia, the U.S., Canada and the U.K. and excludes companies based in China. REXC gathered about $30 million in its first weeks after launch.

REXC holds publicly traded equities rather than physical materials. Examples of cited holdings include MP Materials and USA Rare Earth. Sprott classifies the ETF as a thematic, materials‑sector equity product rather than a direct commodities vehicle.

Todd Rosenbluth, head of research at VettaFi, described rare earths as “critical to global defense systems, to energy, to electrification, data centers.” He noted demand from artificial intelligence, electrification and defense spending is a driver of investor interest. He added, “What you own… are shares of publicly traded stocks.”

Other ETFs offer rare‑earth exposure, including funds from established issuers that hold larger assets and have longer track records. One competing fund currently has roughly 28% exposure to China; REXC restricts holdings to companies based outside China.

The ex‑China focus responds to the concentration of refining and production capacity in China. Recent U.S.-China trade discussions included measures tied to these materials, and some investors have sought suppliers and projects in other countries to diversify supply chains.

Rosenbluth cautioned that excluding China carries tradeoffs. “It’s possible that as China and the United States look to work together… you’d be missing out on that by having an ex‑China approach.” He noted that index construction and the specific companies included will affect fund performance.

Thematic materials ETFs are typically used as satellite positions within an equity allocation rather than core holdings. REXC is positioned to complement strategies tied to technology and defense by providing materials exposure related to demand for AI and electrification.

Sprott offers other products with critical materials exposure, and REXC joins a group of funds targeting strategic minerals outside China. Rare earths, a group that includes the lanthanides, are used in magnets, batteries and sensors. China has historically accounted for the majority of refining and production capacity, and governments and companies are financing mining, processing and recycling projects in other countries.