Zinc may not have the allure of pretty metals like gold and silver, but what it lacks in aesthetic value, it makes up for in utility. A base metal, zinc is highly valued for its anticorrosive quality, illustrated by its use in galvanized steel, which makes it extremely important for infrastructure, among other applications.
With developers continuing to advance projects that have been funded by the 2021 Infrastructure Investment and Jobs Act, many investors have looked for ways to prosper from the increased demand in infrastructure-related materials like zinc. Other investors, however, recognize that it's not just the passage of the legislation that is a boon for zinc. Rather, the metal will undeniably stay in demand well beyond the coming boom in infrastructure spending.
Some conservative investors may balk at buying shares of a single zinc stock, interested instead in mitigating risk with an exchange traded fund (ETF) with zinc exposure. Although there's no pure-play zinc ETF, there are options that provide zinc exposure.
The 3 best
3 Best Zinc ETFs to Buy in 2024
From aluminum to steel to forestry products, investors can find ETFs that offer broad exposure to various metals and materials besides zinc.
| ETF | Assets Under Management | Expense Ratio | Description |
|---|---|---|---|
| iShares MSCI Global Metals & Mining Producers ETF (NYSEMKT:PICK) | $861 million | 0.39% | Focused on companies that produce minerals, aluminum, steel, and diversified metals. |
| iShares U.S. Basic Materials ETF (NYSEMKT:IYM) | $558 million | 0.39% | Focused on U.S. companies that produce raw materials such as metals, chemicals, and forestry products. |
| SPDR S&P North American Natural Resources ETF (NYSEMKT:NANR) | $622 million | 0.35% | Targets 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
Almost half of the holdings in the iShares MSCI Global Select Metals & Mining Producers ETF include diversified metals and mining stocks, such as those that produce zinc. Investors also gain significant exposure to steel and copper stocks, materials critical to infrastructure-oriented businesses.
Investors gain the majority of their zinc exposure through the ETF's fourth-largest holding, Glencore (GLNCY -0.11%)(GLCNF 0.47%). Representing a weighting of about 4.9% in the ETF, Glencore is a diversified metals and minerals producer that is strongly committed to zinc production. In 2023, Glencore reported zinc production of 919,500 tons.
The ETF's positions in Teck Resources (TECK 2.38%), a 2% weighting, and Southern Copper (SCCO 1.12%), a 0.6% weighting, provide additional zinc exposure for investors. Through the first three quarters of 2024, zinc sales have represented about 38% of consolidated revenue for Teck Resources, and the company projects 2024 refined zinc production capacity of 240,000 metric tons to 250,000 metric tons. Southern Copper recently commenced operations at a new zinc concentrator at the Buenavista mine in Mexico, a major development since management expects that the new concentrator will be capable of doubling the company's annual zinc production.
This iShares ETF, which has 248 holdings, has a moderate expense ratio of 0.39% and provides distributions to investors on a semiannual basis.
2. iShares U.S. Basic Materials ETF
2. iShares U.S. Basic Materials ETF
Unlike the iShares MSCI Global Select Metals & Mining Producers ETF, which includes domestic and foreign companies, the iShares U.S. Basic Materials ETF is solely focused on U.S. companies that produce raw materials, including metals, chemicals and forestry products.
Mainly recognizable for its extensive precious metals operations, Newmont (NEM 3.4%) is the sixth-largest holding in this ETF, and it's the equity that mostly accounts for the fund's zinc exposure. Although the company has an expansive portfolio of assets located on four continents, only Peñasquito in Mexico is responsible for the company's zinc operations.
In 2023, Newmont reported zinc production of 115,000 tons. Management has plenty of opportunities to continue producing zinc in the coming years. As of 2023, Newmont reported that Peñasquito has zinc reserves of 4.9 billion pounds.
Although this U.S. company-focused ETF is similar to the iShares MSCI Global Select Metals & Mining Producers ETF in that it has the same modest expense ratio of 0.39%, the iShares U.S. Basic Materials ETF differs in that it provides distributions to investors each quarter and has far fewer holdings in the fund: only 36.
3. SPDR S&P North American Natural Resources ETF
3. SPDR S&P North American Natural Resources ETF
For investors seeking exposure to U.S. companies as well as those found in the Great White North that are engaged in energy, mining, and agriculture businesses, the SPDR S&P North American Natural Resources ETF is a compelling option.
Like the iShares MSCI Global Select Metals & Mining Producers ETF, Newmont provides the lion's share of zinc exposure in the SPDR S&P North American Natural Resources ETF, where it's the fourth-largest holding with a 3.4% weighting in the fund. Teck Resources offers additional zinc exposure, although its position only accounts for a 1.5% weighting.
Contributing even more to the ETF's zinc exposure, Agnico Eagle Mines (AEM 1.03%), a leading precious metals producer, represents another notable position in the ETF with a 3% weighting. In 2023, Agnico Eagle reported zinc production of 7,700 metric tons, but the company plans on expanding zinc production through a joint venture with Teck Resources. In 2023, the two companies formed a 50/50 joint venture to develop the San Nicolás copper-zinc project in Mexico.
Investors with a position in SPDR S&P North American Natural Resources ETF will pay a modest fee; the ETF has an expense ratio of 0.35%, and it provides distributions to investors on a semiannual basis.
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Right for you?
Are zinc ETFs right for you?
Gold and silver might provide glitz and glamour, but base metals like zinc are critical to keeping our infrastructure strong. Savvy investors know this can be just as compelling an investment case as precious metals. For investors seeking the most zinc exposure possible in an ETF, the SPDR S&P North American Natural Resources ETF is a great choice. Investors seeking global exposure will want to dig into the iShares MSCI Global Metals & Mining Producers ETF, while those focused on U.S. stocks will want to explore the iShares U.S. Basic Materials ETF.
FAQs
Investing in Zinc ETFs FAQs
How can I invest in zinc?
There a variety of ways to gain zinc exposure, but two of the most common options are buying zinc-oriented stocks like Glencore and Teck Resources or zinc ETFs like the SPDR S&P North American Natural Resources ETF, iShares MSCI Global Metals & Mining Producers ETF, and iShares U.S. Basic Materials ETF.
How do you trade zinc?
Investors can trade zinc in several ways, including buying zinc futures, zinc stocks, and zinc ETFs.
Should I invest in zinc?
Investors' individual financial goals vary, so it's impossible to categorically say whether investing in zinc is a smart strategy. For those looking to benefit from the growth of infrastructure projects, investing in zinc may be a savvy move. It's critical for investors to complete their due diligence before clicking the "buy" button on a zinc investment.
