LONDON, April 30 - Large institutional managers are directing substantial capital into the mining and metals complex, prompting the fastest pace of inflows the sector has seen in years. Assets under management in mining exchange-traded funds more than doubled to $87.4 billion by March 31, up from $37 billion a year earlier, according to data compiled by research firm ETFGI.
The first quarter saw investors add $8.24 billion to mining funds, reversing a $2.52 billion outflow recorded in the first quarter of 2025 after sweeping U.S. tariffs announced by President Donald Trump. That $10.8 billion swing underscores how quickly investor sentiment can shift in commodity-linked assets.
Fund managers attribute the surge to several concurrent demand impulses. They point to heightened investment in AI-related infrastructure, growing defence spending and a rotation away from richly valued technology stocks. BlackRock portfolio manager Evy Hambro said capital is beginning to move from high-valuation tech names into hard assets, calling the development "the early stages of a commodity supercycle." Hambro highlighted rising capital expenditure in grid upgrades, data centres, electric vehicles and charging stations as sources of increased material intensity in GDP.
Morningstar’s U.S. Technology Index fell 9% in the first quarter, a move that has encouraged some investors to reallocate to sectors viewed as having more durable competitive advantages or tangible asset backing. Shares of BHP and Rio Tinto, the two largest listed miners, reached record highs earlier this year, reflecting enthusiasm among many managers for diversified producers exposed to multiple metals.
Flows and sector tilt
Flows show a distinct preference for industrial metals over traditional safe havens. Copper-focused funds attracted $198 million in March, while gold-related products experienced profit taking after a prior rally. The VanEck Gold Miners ETF (GDX) lost $710 million in March but remains up almost $1 billion year-to-date.
Portfolio managers note the unusual nature of gold pulling back amid an active geopolitical crisis. Rather than driving investors into classic safe-haven assets, current market behaviour suggests participants expect the Iran conflict to spur real-economy responses - chiefly energy security measures and infrastructure programmes that will increase demand for copper, steel and rare earths.
In addition to mining ETFs, oil and gas funds collected nearly $6 billion in net inflows in the first quarter, reinforcing the view that investors are positioning for an era of elevated infrastructure spending tied to energy and security priorities.
Investor rationale and company positioning
Some managers prefer large, diversified miners that sit at the intersection of multiple demand drivers. Anix Vyas, a portfolio manager at Harding Loevner, pointed to strong demand for copper and aluminium and suggested diversified producers such as Rio Tinto are well placed to benefit from rising needs in data centres and industrial applications.
Vyas framed the move as a shift away from software companies that could face AI-driven disruption, toward firms with more durable control over critical minerals and raw materials. That rationale underpins the overweight positions some funds are taking in mining and metals exposure.
Market structure and volatility risks
Analysts warn that metals markets are small relative to global equity and bond markets, making them susceptible to amplified price moves when large sums flow in or out. Trading volumes for metals futures on the London Metal Exchange, including copper and aluminium, amounted to $21 trillion last year, while trading in gold futures at the CME exceeded $25 trillion. By comparison, Nasdaq-100 futures recorded about $85 trillion and S&P 500 futures more than $135 trillion, highlighting the relative thinness of metals derivatives markets.
The mining sector remains a modest share of global equity benchmarks and ETF allocations. The top five mining companies account for only 0.4% of the MSCI ACWI Index, versus 16.8% for the top five technology companies, and metals and mining products represent roughly 0.57% of total equity ETF market share. That small footprint means large flows into mining ETFs can move prices quickly and potentially reverse just as fast if investor sentiment changes.
Valuation metrics for major mining companies also suggest room for re-rating if the supercycle narrative persists: large miners currently trade at roughly 7 to 8 times EV/EBITDA, well below the 14 times multiples seen during the 2008-2010 commodities boom.
Charlie Aitken, group investment director at Australia’s Regal Partners, which was overweight mining and metals with A$21 billion under management at the end of March, argued that copper sits at the centre of multiple demand trends and is critically undersupplied. He said he sees potential for copper prices to double or triple over the next decade and expects that ownership of copper producers could deliver multiples of spot price gains.
Macro implications
Investors recognize that a sustained upswing in commodities could act as an inflation hedge, but they also warn that rising commodity prices could feed into broader inflation pressures. In particular, accelerated price gains stemming from the Iran conflict’s effects on energy markets could compound inflationary forces and pose downside risks to global growth if not matched by productivity gains or supply responses.
While several managers describe the current environment as consistent with a commodity supercycle driven by electrification, AI, and defence-led spending, others caution that the concentration of flows and limited market depth make the outlook highly sensitive to reversals and logistical bottlenecks in mining, refining and transport.
($1 = 1.3957 Australian dollars)