The Brazilian stock exchange has just added a new asset class to its lineup. Investo launched RARA11, B3’s first ETF (Exchange Traded Fund) that allows local investors to gain direct exposure to the global rare earths and critical minerals supply chain—materials at the center of the global technological and energy dispute.
How It Works and Its Composition
RARA11 operates by replicating the performance of REMX (VanEck Rare Earth and Strategic Metals ETF), a fund listed on the New York Stock Exchange (NYSE), in the domestic market. The target asset, in turn, tracks the MVIS® Global Rare Earth/Strategic Metals index, developed to mirror the performance of companies focused on the production, refining, and processing of these elements.
The portfolio consolidates a “pure-play” portfolio, meaning direct access to more than 30 global companies specialized in the sector. The composition is geographically diversified, but reflects the current map of dominance in this industry:
At the company level (micro), the largest single position in the portfolio today is Australian miner Pilbara Minerals, accounting for over 8% of the index weight.
The Investment Thesis
RARA11’s structure rests on a long-term structural demand thesis. Elements in the rare earth class and metals such as lithium, yttrium, and neodymium form the irreplaceable foundation for the energy transition and the cutting-edge tech sector. These materials are the primary inputs in building electric vehicle (EV) batteries, wind turbines, aerospace defense devices, and sensitive electronics.
According to Cauê Mançanares, CEO of Investo, the central thesis lies in the fact that these raw materials are indispensable for economic sectors expected to receive trillions in funding over the coming decades. The asset manager itself noted that the fund’s development was driven by growing strategic demand from local investors looking to access this niche without opening an offshore account.
Risks, Volatility, and Costs
Investors evaluating this asset class need to observe its risk behavior. The sector is historically marked by high volatility. The concentration of productive supply, particularly along the Asian axis, ties the performance of these companies to export policy decisions, state policies, and intense geopolitical disputes.
Regarding the recent returns that drew attention to the sector, the original fund (REMX) recorded impressive gains in the US. The ETF accumulated an increase of approximately 125% in US dollars over the 12 months preceding the launch of the Brazilian version, with an advance surpassing the 21% mark in the listing year alone on B3.
Regarding the cost structure, RARA11 investors will bear a total management fee of 1.03% per year. This structure results from combining the fee charged by the fund in Brazil (0.50% p.a.) with the pass-through fee of the US ETF in which it invests (0.53% p.a.). The asset’s exposure is fully dollar-denominated.
