The A-share nonferrous metals sector has continued its upward trend this year. Within the sector, the rare metals segment has performed notably well, supported by multiple positive factors including an improving supply-demand balance and demand driven by emerging industries. The sustained rise in sector prosperity has directly contributed to the strong performance of related thematic funds. Several nonferrous metals and rare metals themed funds have delivered impressive returns year-to-date, making them popular choices attracting significant investor attention in the capital markets.
According to industry experts, the current rally in the nonferrous metals sector results from a deep convergence of macroeconomic, industrial, and monetary factors.
The sector has maintained its strength since the beginning of 2026, showing a consistent upward trend despite some fluctuations. Data shows that as of March 1, the CSI SWS Nonferrous Metals Index has gained 25.27% year-to-date.
The strong performance of the nonferrous metals sector has laid a solid foundation for the growth of related thematic funds. In the fund market, these thematic funds have performed well across the board this year, with both passive index funds and actively managed funds delivering outstanding results.
Passive index funds, benefiting from their ability to accurately track the sector's performance, have become the preferred investment tool for some investors. Several index funds, including the Wanjia CSI Industrial Nonferrous Metals Theme ETF, the Guotai CSI Nonferrous Metals Mining Theme ETF, and the China Universal CSI Segmented Nonferrous Metals Industry Theme ETF, have achieved net value growth rates exceeding 20% this year.
Some actively managed funds have also performed commendably by leveraging the professional judgment of fund managers to make precise allocations during sector rotations. For instance, the Western Lead Strategy Preferred Mixed Fund and the Western Lead New Power Mixed Fund are currently among the top performers in terms of year-to-date net value growth. Based on their portfolio disclosures, both funds increased their allocations to the agriculture and nonferrous metals sectors during portfolio adjustments in the fourth quarter of 2025. Their top ten holdings include stocks from the nonferrous metals industry such as Zijin Mining Group, Shandong Gold Mining, Chifeng Jilong Gold Mining, and Tianshan Aluminum Group.
The growth in fund performance has also led to continuous capital inflows into related thematic funds, with investors actively allocating to these products. In the first two months of this year, the Southern CSI SWS Nonferrous Metals ETF recorded a net inflow of 13.651 billion yuan, while the ChinaAMC CSI Segmented Nonferrous Metals Industry Theme ETF saw net inflows of 8.990 billion yuan.
Rare metals, as an important sub-sector of nonferrous metals, are experiencing rising industry prosperity, leading to strong performance in related thematic funds. On the ETF performance rankings, several rare metals ETFs are among the top gainers this year. Data shows that as of March 1, funds such as the Huafu CSI Rare Metals Theme ETF and the GF CSI Rare Metals ETF have all gained over 30% year-to-date. These funds track the underlying CSI Rare Metals Theme Index, which selects up to 50 listed company securities involved in rare metals mining, smelting, and processing to reflect the overall performance of companies in this theme. The index's top ten weighted holdings cover industry leaders like China Molybdenum, Northern Rare Earth, and Huayou Cobalt, spanning several high-growth segments including rare earths, tungsten, and cobalt.
Looking ahead, the rare metals sector is expected to remain in a tight supply-demand balance for a considerable period, with prices likely to trend higher. Globally, the supply-demand dynamics for these strategic resources are being reshaped. On the supply side, against a backdrop of increasing global uncertainties, countries are strengthening control over their strategic rare metal resources. On the demand side, the global transition to new energy and the rapid development of the AI industry are driving fast growth in demand for rare metals. Additionally, anticipating potential supply constraints, countries are increasing their strategic reserves of rare metals, which further amplifies demand.
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