For the latest standardized performance and holdings of METL, please visit METL. Past performance is no guarantee of future results.
Video Transcript
Gabrielle Vennitti: Hi, and welcome back to another episode of Just For Funds. I'm your host, Gabby Vennitti. And today, I'm joined by Steve Schoffstall from Sprott ETFs, who will discuss the Sprott Active Metals & Miners ETF, ticker METL, also known as "Metal". Steve, so great to have you in the studio.
Steve Schoffstall: It's great to be here. Thank you.
Gabrielle Vennitti: We're here to talk a little bit about your ETF, METL. Can you tell us a little bit more about it?
Steve Schoffstall: The Sprott Active Metals & Miners ETF, ticker METL or "Metal" as we call it, is the only actively managed ETF that provides exposure to a diversified group of miners. This differs from what we see in the market, where other ETF strategies may only give exposure to companies domiciled in the U.S. or lack exposure to miners that extract resources such as uranium, gold and silver, which comprise a significant portion of the mining industry.
Gabrielle Vennitti: I know you just mentioned a little bit, but what metals does METL provide exposure for?
Steve Schoffstall: It provides exposure to several critical materials. That's the majority of its exposure: silver, uranium, rare earths, copper and the battery metals. It also provides exposure to other materials that aren't considered critical but are very important for infrastructure development. That would include metals such as steel, platinum and palladium. It also has a much broader mandate, providing exposure to gold, zinc, iron ore and aluminum, among others.
Gabrielle Vennitti: The mining sector seems to be booming. Could you discuss the macroeconomic themes currently driving the mining sector and the broader metals market?
Steve Schoffstall: A lot of it comes down to greater demand for electricity. If you were to look out through 2050, there's about a 170% increase in the expected electricity demand. There are several areas from which that comes. This would include developed countries, including artificial intelligence and the energy-intensive data centers that we see. You see developing countries that are undergoing their own economic growth, and they're starting to acquire some of the things that we've enjoyed, such as air conditioning, for example. These are some of those overarching themes.
And with that, we also have increased electrification, so whether that's through EVs or just building out the infrastructure. All the metals we discussed play a crucial role in shaping the new global economy.
Gabrielle Vennitti: I know that there's a ton of different strategies that go into funds like this. Can you tell us a little bit more about the investment team selection process?
Steve Schoffstall: This is an area where we believe that Sprott really sets itself apart. The investment team on this ETF has over half a century of experience. It's a very diverse group of individuals. One of the portfolio managers is an economic geologist who had previously worked at mining companies. He would conduct feasibility analyses and determine if it was profitable to pursue mining projects.
The team brings experienced investment expertise to the table, conducting over 200 management team meetings and up to 30 site visits each year. They've visited over 40 countries, getting on the ground and talking to all levels of management. Not just senior management, but also the site managers and people in the operations at those individual mine sites.
This allows them to feed back to their proprietary models, where they examine specific valuation metrics. They also conduct a robust sensitivity analysis, examining price sensitivity and other factors that may impact the mining operations.
Gabrielle Vennitti: Given that breadth of experience, how might investors benefit from having an actively managed mining ETF in their portfolio?
Steve Schoffstall: The mining sector is different from many other sectors, and it really takes a lot of industry knowledge to understand the market because there are so many moving parts. Suppose you were to examine the performance dispersion, which is essentially the difference between the top-performing company and the bottom-performing company, over the last five years. In that case, it averages over 600% per year.
Put another way, if you examine quartiles, the top 25% of mining companies over the last five years have all had positive performance. That's only a quarter of the mining companies that can make that claim. All the other quartiles have had companies with negative or predominantly negative performance. This is where the expertise of the Sprott investment team comes into play, targeting companies that are consistently well-managed and able to meet their objectives.
Gabrielle Vennitti: Thank you so much for telling us a little bit more about the fund today. It was great to have you in the studio.
Steve Schoffstall: It's great to be here. Thank you.
Gabrielle Vennitti: And that was Steve Schoffstall of Sprott ETFs talking to us about their new actively managed mining ETF, Sprott Active Metals & Miners ETF, ticker METL.
Important Disclosures & Definitions
An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Sprott Active Metals & Miners ETF Statutory Prospectus, which contains this and other information, visit https://sprottetfs.com/metl/prospectus, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing.
The Sprott Active Metals & Miners ETF is new and has limited operating history. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s shares and the possibility of significant losses. The Fund will be concentrated in metals, mining and related industries. Companies in the metals and mining industry are susceptible to fluctuations in worldwide metal prices and extraction and production costs. In addition, metals and mining companies may have significant operations in areas at risk for social and political unrest, security concerns and environmental damage. These companies may also be at risk for increased government regulation and intervention. Such risks may adversely affect the Fund. The Fund is not suitable for all investors. The Fund is considered non-diversified and can invest a greater portion of assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single investment could cause greater fluctuations in share price than would occur in a diversified fund. The Fund adviser’s judgments about the growth, value, or potential appreciation of an investment may prove to be incorrect or fail to have the intended results, which could adversely impact the Fund’s performance relative to its benchmark.
The Fund adviser’s judgments about the growth, value, or potential appreciation of an investment may prove to be incorrect or fail to have the intended results, which could adversely impact the Fund’s performance relative to its benchmark.
Shares are not individually redeemable. Investors buy and sell shares of the Sprott Active Metals & Miners ETF on a secondary market. Only “authorized participants” may trade directly with the Fund, typically in blocks of 10,000 shares.
Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses, affect the Fund’s performance.
Sector weightings are determined using the Bloomberg Industry Classification Standard (“BICS”).
Sprott Asset Management USA, Inc. is the Investment Adviser to the Sprott Active Metals & Miners ETF. ALPS Distributors, Inc. is the Distributor for the Sprott ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc.
Green steel” is produced using environmentally sustainable methods, primarily by minimizing or eliminating carbon dioxide emissions, typically achieved by replacing coal-based blast furnaces with hydrogen-based direct reduction processes, using renewable energy sources in steel production, and recycling scrap steel in electric arc furnaces powered by clean electricity. Green steel may offer growing demand from industries seeking low-carbon materials, but it faces higher production costs, technology, scalability challenges and policy uncertainty compared to traditional steel.
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