Assets held in mining exchange-traded funds more than doubled to $87.4 billion by the end of Q1 2026, from $37 billion a year earlier, as major fund managers declared the early stages of a mining supercycle driven by AI infrastructure, rising defence spending, and a structural shift away from technology equities.
Investors directed $8.24 billion into mining in the first quarter of 2026 — a $10.8 billion swing in sentiment compared with Q1 2025, when US tariff uncertainty triggered net outflows of $2.52 billion, according to data compiled by research firm ETFGI for Reuters.
Mining Supercycle Thesis: What Fund Managers Are Saying
BlackRock portfolio manager Evy Hambro described the current rotation as “the early stages of a commodity supercycle,” arguing that capital is moving out of high-valuation technology stocks and into hard assets. He cited rising material intensity across grid infrastructure, data centres, electric vehicles, and charging stations as structurally different from the China-led demand boom of the 2000s.
Fidelity portfolio manager Taosha Wang went further, stating that a mining and energy-focused supercycle has already arrived, accelerated by the Iran conflict and governments prioritising supply security. Oil and gas funds attracted nearly $6 billion in net inflows during Q1 2026 on the same thesis.
Shares in Rio Tinto (LON: RIO) and BHP (ASX: BHP) — the two largest mining companies by market capitalisation — both hit record highs in 2026. Yet despite the rally, major mining stocks still trade at 7 to 8 times EV/EBITDA, well below the 14 times multiples seen during the 2008–2010 commodity boom, suggesting fund managers see significant further upside if the supercycle thesis holds.
Copper at the Centre of the Critical Minerals Rally
Copper funds drew $198 million in March alone, reflecting the metal’s position at the intersection of AI data centre buildout, electrification, and defence manufacturing. Charlie Aitken, group investment director at Australia’s Regal Partners — which held A$21 billion ($15.05 billion) under management at end-March — stated that copper prices “could double or triple over the next decade,” with producers likely to deliver multiples of spot price growth.
Anix Vyas of Harding Loevner identified Rio Tinto as a particular beneficiary given its exposure to both copper and aluminium, metals seen as direct plays on data centre construction and industrial applications. The shift in investor logic — away from software companies exposed to AI disruption, toward miners with durable control over physical resources — marks a notable change in portfolio construction at major institutions.
Rare earths and diversified critical minerals producers are also attracting interest as the Iran conflict drives governments to prioritise domestic supply chains. Rather than rotating into gold — a traditional geopolitical hedge — markets appear to be pricing a real-economy response requiring copper, steel, and rare earths. The VanEck Gold Miners ETF lost $710 million in March despite remaining up nearly $1 billion year-to-date, a signal that investors are favouring industrial metals over safe havens.
Small Markets, Large Swings: The Volatility Risk
The mining ETF boom carries structural risk. Metals futures markets are small relative to equities: London Metal Exchange trading volumes in copper and aluminium reached $21 trillion in 2025, while CME gold futures exceeded $25 trillion — both dwarfed by the $135 trillion in S&P 500 futures and $85 trillion in Nasdaq-100 futures. The top five mining companies represent just 0.4% of the MSCI ACWI Index, versus 16.8% for the top five technology companies.
Heavy inflows into small markets can amplify volatility in both directions. Analysts caution that bottlenecks in mining, refining, and transport — rather than demand — are more likely to determine short-term price behaviour. The sharp year-on-year swing in ETF flows, from a $2.52 billion outflow in Q1 2025 to an $8.24 billion inflow in Q1 2026, illustrates how quickly sentiment can reverse.
The AI-driven demand for critical minerals underpins much of the structural bull case, but investors also acknowledge that accelerating inflows into hard assets could compound inflation pressures from the Iran war’s impact on energy markets — a feedback loop that poses risks to the broader global growth outlook.
What is driving the 2026 mining supercycle?
Fund managers point to three structural demand drivers: AI and data centre infrastructure requiring copper and rare earths, defence spending increases following the Iran conflict, and the continued electrification of transport and energy grids. These are seen as more geographically diversified than the China-led commodity boom of the 2000s.
How much money has flowed into mining ETFs in 2026?
Assets under management in mining ETFs more than doubled to $87.4 billion by 31 March 2026, from $37 billion a year earlier. Net inflows into mining funds in Q1 2026 reached $8.24 billion, a $10.8 billion swing in sentiment versus Q1 2025 when tariff uncertainty caused $2.52 billion in outflows, according to ETFGI data compiled for Reuters.
Why are copper prices seen as central to the mining supercycle thesis?
Copper is used across data centre construction, EV charging infrastructure, grid upgrades, and defence manufacturing — making it a direct play on AI, electrification, and supply security simultaneously. Major fund managers, including Regal Partners, have stated copper prices could double or triple over the next decade given structural undersupply relative to these demand drivers.
Why did gold underperform despite the Iran conflict?
Rather than seeking traditional safe-haven exposure, investors appear to be positioning for a real-economy response to the conflict — prioritising copper, steel, and rare earths over gold. The VanEck Gold Miners ETF lost $710 million in March 2026, despite remaining up nearly $1 billion year-to-date, suggesting profit-taking as capital rotated toward industrial metals.
What is the main risk to the mining supercycle?
Metals markets are structurally small relative to equities and bond markets, making them vulnerable to sharp reversals when sentiment shifts. Analysts also flag bottlenecks in mining, refining, and transport infrastructure as near-term constraints, and warn that accelerating commodity price gains could compound inflation pressures from the Iran war’s energy market impact.
