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 anti-corrosive quality, illustrated by its use in galvanized steel and making it extremely important for infrastructure, among other applications.
With the passage of the Infrastructure Investment and Jobs Act in November 2021, 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 only the passage of the legislation that is a boon for zinc. Rather, the metal will undeniably stay in demand well beyond the coming boon 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.
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) | $1.6 billion | 0.39% | Focused on companies that produce minerals, aluminum, steel, and diversified metals. |
| iShares U.S. Basic Materials ETF (NYSEMKT:IYM) | $835.4 million | 0.39% | Focused on American companies that produce raw materials such as metals, chemicals and forestry products. |
| SPDR S&P North American Natural Resources ETF (NYSEMKT:NANR) | $576.4 million | 0.35% | Targets exposure to U.S. and Canadian energy, metals, mining, and agriculture companies. |
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 third-largest holding, Glencore. Representing a weighting of about 5.6% in the ETF, Glencore is a diversified metals and minerals producer that is strongly committed to zinc production. In 2022, Glencore reported zinc production of 938,500 tons.
The ETF's positions in Teck Resources, a 1.8% weighting, and Southern Copper, a 0.6% weighting, provide additional zinc exposure for investors. Generating 20% of its 2022 revenue from sales of zinc, Teck Resources estimates that it has an annual refined zinc production capacity of 295,000 metric tons. Southern Copper expects to commence operations at a new zinc concentrator at the Buenavista mine in Mexico in the second half of 2023. When it comes online, management expects that the new concentrator will be capable of doubling the company's annual zinc production.
The iShares MSCI Global Select Metals & Mining Producers ETF, which has 260 holdings, has a moderate expense ratio of 0.39%, and it provides distributions to investors on a semiannual basis.
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 is the fifth-largest holding in the iShares U.S. Basic Materials 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 Penasquito in Mexico is responsible for the company's zinc operations.
In 2022, Newmont reported zinc production of 188,500 tons, but management expects the amount to grow in the coming years, forecasting average annual zinc production of 250,000 tons from 2023 to 2027.
Although the iShares U.S. Basic Materials 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%, it differs in that it provides distributions to investors each quarter and has far fewer holdings in the fund: Only 39.
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 5.2% weighting in the fund. Teck Resources offers additional zinc exposure, although its position only accounts for a 3.5% weighting.
Contributing even more to the ETF's zinc exposure, Agnico Eagle, a leading precious metals producer, represents another notable position in the ETF with a 3.5% weighting. In 2022, Agnico Eagle reported zinc production of 8,200 metric tons. Management expects growth in 2023, forecasting zinc production to climb to 10,532 metric tons.
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.
Are zinc ETFs right for you?
Gold and silver might provide glitz and glamor, 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.
