Powering transition: critical minerals are central to the next era

At the same time, the energy transition is intensifying investment in renewable power, alongside the need for significant grid building and modernisation.

These trends are highly dependent on a relatively small group of minerals — including copper, aluminium and rare earth elements — which are essential for electric vehicles, batteries, semiconductors and renewable infrastructure. 

Demand for these critical materials is rising, while supply remains constrained because of long project lead times and limited new capacity. This imbalance may provide sustained pricing support and attractive long-term investment opportunities.

Our Future Minerals strategy invests in global companies that are positioned at the forefront of this transition — both within the extraction industry and across the wider minerals value chain.

What differentiates our Future Minerals approach?

A key differentiator of our strategy is our quality-led, ESG (environmental, social and governance)-integrated approach. From an initial universe of around 1,500 companies, inclusion requires at least 20% revenue exposure to the future minerals theme, alongside robust quality and ESG credentials.

Companies must pass ESG screens, with a preference for strong governance, environmental practices and risk management. This helps to mitigate tail risks in a complex and often volatile sector.

The portfolio invests across four core areas: 

This structure provides diversified exposure across the full minerals ecosystem, rather than reliance on pure-play miners alone.

Opportunities

In a concentrated global-equity market, the portfolio offers diversification through low US exposure and minimal exposure to technology — two areas that dominate global indices.

Structural demand drivers are also becoming more visible. Electrification, renewable energy deployment, grid upgrades and rapid AI adoption are increasing global energy intensity. Copper is central to this demand.

Pathways to greater energy security

The ongoing conflict in the Middle East underscores the strategic importance of critical minerals, reinforcing the case for electrification and renewable energy as key pathways to greater energy security and reduced reliance on oil and third-party energy sources.

Data centre energy demand to soar

Data centres currently account for around 3% of US energy consumption, a figure projected to increase to around 12% by 2030 (McKinsey, 2024). Meeting this demand reinforces the need for both clean energy infrastructure and the minerals required to build it.

Ex-China beneficiaries to emerge?

Many critical materials, including rare earths, remain highly concentrated in China. Efforts by the US and EU to diversify supply chains are accelerating, which creates opportunities in regions that are trying to de-risk their mineral value chains. MP Materials, the top contributor in 2025, illustrates this trend, and we expect further ex-China beneficiaries to emerge during 2026.

While commodity markets can be volatile and short-term cyclicality is to be expected, we believe the long-term fundamentals of the asset class remain structurally attractive and that the strategy is well-positioned to capture opportunities in 2026 and beyond.

Key sectors in the portfolio

Copper

Copper is the poster child of critical minerals. It’s a key theme within the portfolio, with around 30% exposure. It’s fundamental to electrification and has no practical substitute as an electricity conductor. Following a 44% rise in the London Metal Exchange’s spot price in 2025, demand resilience will be tested in 2026. However, copper’s relatively low cost within end-use applications suggests higher prices can be absorbed without affecting demand.

Supply remains constrained because of disruption at major producers and long project lead times, while merger and acquisition activity highlights the strategic value of high-quality assets. We expect these supply challenges to keep the market tight well into 2026.

Uranium

Uranium is benefiting from a global renaissance in nuclear energy. In 2025, Western governments reaffirmed nuclear power as a core pillar of energy security and decarbonisation. China continues its nuclear expansion at full speed. Inventories have been drawn down over the past decade, mining activity has lagged demand, and supply remains highly concentrated. With uranium accounting for less than 10% of nuclear operating costs, demand elasticity is extremely low. Against this backdrop, we see 2026 as a potential inflection point for the uranium market. The strategy has around 8% exposure to uranium. This includes a holding in Kazatomprom, the world’s largest and lowest-cost producer, which also benefits from comparatively strong environmental credentials given its in-situ recovery extraction methods.

Outlook for 2026

Despite heightened geopolitical uncertainty, commodity markets performed strongly in 2025. We think this momentum will extend into 2026. A broad rotation away from software and growth‑heavy assets towards hard assets and materials supports our position. The portfolio currently has around 75% exposure to mining companies — an area where investors remain structurally underweight, with basic materials accounting for just 3.8% of the MSCI All Countries World Index (Morningstar, 31 January 2026).

Learn more about Future Minerals

To learn more about our Future Minerals strategy and discover ways to diversify portfolios, visit our website.

This article was originally published in Investment Week.

Companies are selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance. Past performance is not a guide to future results.