Highlights

• ICBC Credit Suisse launched Rare Metals ETF tracking CSI Rare Metals Thematic Index.
• Management fees are 0.45%.
• The fund holds key rare metal companies like Salt Lake Co., Northern Rare Earth, and Ganfeng Lithium.
• Reflects the strategic mineral sector.
• Despite a -31.77% return since inception, the ETF offers diversified exposure to the critical rare metals market.
• The market has potential geopolitical challenges.

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The Rare Metals ETF Fund (159671), (opens in a new tab) launched on February 17, 2023, by ICBC Credit Suisse, closed with a modest 0.59% gain on January 24, 2025, reflecting a turnover of 5.9849 million yuan. This ETF tracks the CSI Rare Metals Thematic Index and charges annual management and custody fees of 0.45% and 0.07%, respectively. Despite a year-to-date fund share reduction of 0.44%, the scale of the fund grew slightly by 0.53%, reaching 534 million yuan with 784 million shares as of January 23.

Yicai Global (opens in a new tab), owned by the state-owned Shanghai Media Group (opens in a new tab), reports that liquidity for the Rare Metals ETF appears strong. Over the past twenty trading days, its cumulative turnover has been 240 million yuan, and its average daily turnover is approximately 11.99 million yuan.

Capital of Chinese Capital--Shanghai

However, the fund's performance under current manager Shi Baojun has been underwhelming, reporting a -31.77% return since inception. Major holdings include leading rare metal companies such as Salt Lake Co., Ltd. (9.41% position), Northern Rare Earth (8.07%), and Ganfeng Lithium (5.94%), along with smaller allocations to China Molybdenum, Huayou Cobalt, and others. These holdings reflect a diverse exposure to rare earth and critical mineral sectors essential for renewable energy, EV batteries, and high-tech applications.

Investor Considerations

While the ETF provides exposure to the increasingly critical rare metals sector, key questions arise regarding its overall strategy and performance. First, the fund’s negative return under its current management raises concerns about its ability to deliver value amidst volatile commodity markets. Additionally, the reliance on major players like Ganfeng Lithium and Northern Rare Earth could expose the fund to market concentration risks, especially given China's dominance in the global rare earth supply chain.

The fund also appears heavily focused on Chinese assets—how might geopolitical tensions or global supply chain disruptions affect its holdings? Finally, investors should evaluate how the ETF plans to navigate environmental and regulatory challenges as sustainability concerns intensify.

This ETF offers a diversified entry point for bullish investors in the rare metals sector. However, before committing, investors must carefully scrutinize management performance, portfolio composition, and macroeconomic risks. Investors should remain cautious, considering the complex dynamics of rare earth markets and the potential for rapid price fluctuations in these strategic materials.

Importantly, most of the rare earth complexes in China are owned by the state.