The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Sprott Energy Transition Materials ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The team managing the passive strategy earns a Below Average People Pillar. The strategy merits an Average Process Pillar rating.  A high quality exposure means holding stocks that are consistently profitable, growing, and have solid balance sheets. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

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Albemarle

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Uranium Energy

Southern Copper

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Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Sprott Energy Transition Materials ETF earns an Average Process Pillar rating. The most substantial contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Low costs across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also bolster the rating. The pattern of low costs at the firm suggests that it is focused on delivering strong results for investors. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 43%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Nasdaq Sprott Energy Transition Materials Index.  The fund invests at least 80% of its total assets in securities of the index. The index is designed to track the performance of companies that derive at least 50% of their revenue and/or assets from (i) mining, exploration, development, production, recycling, refining, and or smelting of energy transition materials; (ii) investments in energy transition materials that represent all or a significant portion of their assets. The fund is non-diversified. 

 The portfolio is overweight in basic materials by 27.1 percentage points in terms of assets compared with the category average, and its communication services allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and utilities, underweight the average by 10.3 and 3.3 percentage points of assets, respectively. The strategy owns 108 securities and is quite concentrated. In particular, 43.4% of the strategy's assets are housed within the top 10 holdings, compared to the category average of 25.3%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 33% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

Sprott’s team receives a Below Average People Pillar rating. The team is bolstered by the portfolio managers' outperformance of peers at the funds they run, as measured by their combined three-year manager excess returns. However, the rating is held back by the parent firm's five-year success ratio of 30%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 50% also limits the team.

Below Average

People

Sprott's focus on a niche area of the market and some mixed characteristics lead to an Average Parent rating.
This firm has undergone several changes in the past five years. In 2017, the firm spun off the non-precious-metals vehicles it had launched over the prior decade, and founder Eric Sprott retired. Getting back to its roots, the firm has since consolidated one of Canada's gold exchange-traded funds into its own and acquired a gold ETF, a silver ETF, and a U.S.-based, actively managed open-end mutual fund focused on gold-mining stocks. Sprott has recently expanded its lineup to include critical minerals, namely a uranium ETF and a physical platinum and palladium trust, but the firm remains largely focused on precious metals.
A relatively deep investment team manages this niche lineup. In 2022, 25-year industry veteran John Ciampaglia took over as Sprott Asset Management's CEO from Whitney George after George became Sprott Inc.'s CEO. That said, George remains involved in investment management, and an experienced 12-person team remains, including John Hathaway and Doug Groh, who came aboard as part of the firm's 2020 acquisition of Tocqueville's gold strategies. These resources could give the firm an edge, but key-person risk remains given the long tenures of Hathaway and George. Further, the firm's niche focus creates potential for large swings in both assets and performance.

Parent

Sprott Energy Transition Materials ETF

SETM supports the global move to cleaner energy by tracking an index of US and foreign companies related to energy transition materials. Securities are selected based on revenue and weighted by market-cap.

Sprott Junior Copper Miners ETF

Sprott Uranium Miners ETF

With the global transition to alternative energy sources, it's no secret that critical minerals can move the needle when it comes to growth exposure, but exchange-traded fund (ETF) investors want to know exactly where these opportunities exist. ETF provider Sprott has a pair of funds to begin and end that search.

These 3 Critical Minerals ETFs Move the Growth Needle

The energy transition is underway globally, with policies, innovations, and pressure ramping up to decarbonize. It creates a wealth of opportunity for investors and is one of the fastest growing areas of investment.

Don't Miss Out: This Investment Thesis Grew at 24% CAGR

A confluence of factors could be brewing that may work in favor for bullish copper prices. Short- or long-term investors may want to get ahead of the move given the drop in copper prices the past year.

Copper Prices Could Be in Early Stages of Uptrend

The receptiveness of countries to nuclear energy will be imperative for growth in uranium-focused mining companies. Japan's inclusion of uranium in its critical minerals list is a step in the right direction.

Uranium Makes Japan's Critical Minerals List

Investors are waiting to see if gold can retain its luster from 2023. Meantime, copper could be picking up where the precious metal left off.

Copper Could See a Comeback as Demand Outpaces Supply

Geopolitical factors in the Middle East are pushing oil prices higher in the short term. But the long-term view is a global pivot to clean energy should divert attention from oil and into critical minerals.

Clean Energy Pivot Will Shift Focus From Oil to Critical Minerals

The global race to secure critical minerals is continuing as the European Union (EU) ramps up its efforts to do just that. In effect, this should provide more growth prospects for ETFs that focus on critical minerals investments.

European Union Ramps Up Efforts to Secure Critical Minerals

The India West Journal reported that the United States and India are looking to collaborate on its energy agendas, specifically when it comes to critical minerals. Nations collaborating on critical minerals goals has been an ongoing trend as the world transitions to alternative energy sources.

U.S. and India Looking to Collaborate on Critical Minerals

Sprott Nickel Miners ETF

Rich in critical minerals like nickel, Indonesia is ready to start working with United States on an agreement to supply the nation with these minerals in order to meet increasing demand for electric vehicles.

Indonesia Ready to Work on Critical Minerals Agreement With U.S.

Volatility during the month of September could pave the way for defensive portfolio moves, which include getting commodities exposure. Also, it's historically been a sound strategy, according to data from S&P.

Commodities Exposure Can Help Investors Play Defense

Nations like Japan and the United Kingdom are looking to shore up the demand for critical minerals. They are pouring investments into countries like Africa, which can help on the supply end of the equation.

Japan and U.K. Jointly Investing in Critical Minerals in Africa

Given its key role in the global transition to renewable energy sources, copper has been officially classified as a critical mineral in the eyes of the U.S. Department of Energy (DOE). There are stringent requirements when it comes to the critical mineral classification.

2 ETFs to Ponder After Copper's Inclusion as a U.S. Critical Mineral

The United States currently has a power grid that is in need of modernization. Especially the case with the threat of harsh weather from climate change looming in the backdrop.

Power Grid Modernization Should Create Critical Minerals Demand

Demand for critical minerals will set the stage for certain regions around the globe that are abundant in supply, such as Latin America. This creates a growth opportunity worth considering in exchange traded funds (ETFs) like the Sprott Energy Transition Materials ETF (SETM).

Latin America Throws Spotlight on Critical Minerals Demand

As the shift to alternative energy continues to gain momentum, Britain is one of the latest countries to ally with other nations. In this case, that nation is Zambia.

Britain, Zambia Agree to Critical Minerals Deal

An International Energy Agency report confirmed that rising demand for critical minerals is occurring worldwide with lithium, cobalt, and nickel seeing an exponential rise in particular. A global focus on reducing carbon emissions is certainly a catalyst as more nations seek alternative energy sources.

Energy Agency Confirms Rising Demand for Critical Minerals

Sprott Lithium Miners ETF

There's somewhat of a changing of the guard when it comes to commodities futures contracts. Oil could lose its futures trading volume crown to critical minerals like lithium, which is seeing heightened activity.

Lithium Futures Activity Has Been on the Rise

Geopolitical factors will continue to play a pivotal role for critical minerals. The United States in particular could be a catalyst for rising prices as it looks to rein in control of the industry from China.

Washington Backs Efforts to Ramp Up Critical Minerals Control

The global transition to alternative energy options is causing countries to align themselves in order to obtain critical minerals. India and Australia provide a prime example of this type of strategic partnership.

India, Australia Discuss Strategic Partnership With Critical Minerals

The reliance on critical minerals continues to heighten. The United States and Australia are coming to terms on an agreement that will be important for meeting EV demand.

U.S.-Australia Agreement Sets Wheels in Motion for Critical Minerals

The shift to alternative energy sources is already creating pent-up demand for critical minerals. Given this, deep sea mining could be necessary in order to extract these minerals to meet demand.

Deep Sea Mining Could Unlock Access to More Critical Minerals

The two top economic superpowers are vying for influence in Africa, as the world transitions to higher usage of alternative energy. As such, the U.S. and China are competing for resources that are pertinent to this energy transition.

The U.S. and China Are Vying for Influence in Africa for Critical Minerals

Sprott Asset Management announced the launch of the Sprott Nickel Miners ETF (Nasdaq: NIKL), an ETF focused on nickel mining companies that provide a mineral necessary for the clean energy transition.

Sprott Launches Nickel Miners ETF

The shift to clean energy will create a heavier reliance on energy transition materials. China's influence will help set the stage for these materials, opening up investment opportunities for exchange traded funds (ETFs) like the Sprott Energy Transition Materials ETF (SETM).

China's Influence Will Help Set the Stage for Energy Transition Materials

As the world continues to witness a transition from fossil fuels to alternative energy sources, there will also be a need for energy transition materials. This will come at an increased pace as global governments around the world are scrambling to achieve their lofty goals in order to reduce their carbon footprint.

News for Sprott Energy Transition Materials ETF ETF (SETM)