Germany-based asset manager DWS has launched an actively managed equity fund focused on companies in the essential materials sector. The fund invests exclusively in listed securities and offers daily liquidity, according to the announcement.
The fund’s mandate targets producers and developers in the mining sector — specifically companies involved in material extraction, production and processing. At least 70% of assets must be held in shares of global companies that are part of either the S&P TSX Energy Transition Materials Index or the S&P Global Essential Metals Producers Index. These benchmark indices serve as the structural backbone for the portfolio, ensuring that the majority of holdings are tied to publicly recognized leaders operating along the essential materials value chain, from raw material extraction through to refined product processing.
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“Energy supply, data centers and defense all face the same structural bottleneck: dependence on critical materials poses significant risks to supply chains,” said Taylor Smith, portfolio manager of DWS Invest Essential Materials Producers and Co-Head of Commodities and Natural Resources Equities at DWS. “Expansion in these sectors is driven less by demand than by the availability of these materials – and it is precisely along this bottleneck that key value drivers can emerge.” Smith’s dual role as both portfolio manager for this specific fund and co-head of the broader commodities and natural resources equities team shows the strategic importance DWS places on this segment. His perspective highlights that the fund is designed not merely to track commodity prices but to capitalize on the structural constraints facing entire industries that depend on a secure supply of these inputs.
Essential or critical materials — including lithium, copper, nickel, aluminum, cobalt and rare earths — form the foundation of many modern technologies and industrial applications. They sit at the center of several long-term structural trends. Lithium and cobalt, for instance, are indispensable for high-density battery storage used in electric vehicles and grid-scale energy systems, while copper and nickel are critical for electrical wiring, charging infrastructure and the durable alloys required in defense hardware. Rare earths, a group of seventeen chemically similar elements, are essential for the powerful permanent magnets found in wind turbine generators, electric vehicle motors and advanced military guidance systems. Aluminum, valued for its light weight and conductivity, plays a growing role in lightweight vehicle construction and high-voltage power transmission lines needed for electrification.
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Those trends include the energy transition and electrification, rising demand from electromobility, data centers, artificial intelligence and defense. At the same time, the geopolitical dimension of supply security is gaining importance, because extraction and processing of many of these materials are largely concentrated in a handful of countries and manufacturers. For example, the Democratic Republic of the Congo dominates cobalt mining, while China controls the vast majority of rare earth refining and a significant share of lithium chemical processing. This geographic concentration creates vulnerabilities: a disruption in one region can ripple through global supply chains, affecting everything from smartphone production to military vehicle manufacturing. The fund’s focus on globally listed companies allows it to handle these geopolitical risks by selecting firms that may operate in more diversified jurisdictions or that control vertically integrated operations from mine to finished material.
The fund gives investors a targeted way to add thematic diversification to an equity portfolio. It’s aimed at investors with a medium- to long-term horizon who can accept higher volatility and theme-specific fluctuations, and who value active stock selection. Such investors might include institutional allocators seeking exposure to real assets without directly owning physical commodities, or high-net-worth individuals looking to hedge against inflation and supply-chain disruptions. The active management approach means that the portfolio manager can overweight or underweight specific materials or regions based on ongoing fundamental analysis, rather than passively tracking a fixed basket of stocks. This flexibility is particularly relevant in a sector where technological shifts — such as the development of sodium-ion batteries as an alternative to lithium-ion — can rapidly alter the demand outlook for individual materials.
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DWS did not disclose the fund’s expense ratio or initial size. The new fund will compete with other thematic equity products that target critical materials and mining companies. Existing competitors in this space include offerings from BlackRock, VanEck and Global X, which have launched similar strategies focused on uranium, lithium, rare earths and broader metals and mining ETFs. By entering this market with an actively managed structure rather than a passive index fund, DWS is betting that skilled stock selection can outperform simple replication of commodity-linked benchmarks, especially during periods of market dislocation or when individual companies face operational challenges such as mine permitting delays or labor disputes.
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