Van Eck Global launched a new “rare earth” ETF last week that harkens back to high school chemistry.

(Really, how often do you read about the periodic table of the elements in a fund prospectus?)

It also brings into a focus a tough political environment for these specialized commodities.

The fund will buy stocks of companies that are involved in the mining, refining and manufacturing of rare earth metals, which make much of our modern high-tech lives possible.  These metals are used for very specific purposes in a lot of today’s glitz like hybrid cars, lasers, hard drives, LED televisions and even military defense systems, says Ed Lopez, marketing director of Van Eck Securities Corp.

Lopez fully acknowledges the risks facing this new fund, the Rare Earth/Strategic Metals ETF [REMX]. In fact, it was what he most wanted to talk about. (The high degree of volatility took a prominent place in all the company’s writings on the fund.)

The first thing that comes to mind is the geopolitical element. China produces 95% to 97% of the world’s rare earth metals and has used that power to control the supply for the rest of the world. China will need much of its supply for its own population, as it grows in wealth and wants more of those high-tech touches of modern life. But there are worries that it also will be all too glad to use its monopolistic power to get its way in political disputes. China has reportedly denied that it ordered an overt ban on exports to Japan, but the fracas between the two countries still underscores China’s outsized power in this equation.

Another risk has nothing to do with global politics, but is still a very real consideration. The fund will be made up of small-cap and mid-cap stocks, Lopez says. Specifically, it will be 46% mid-caps and 51% small-caps. The remaining 3% will be micro-caps. Such stocks are simply hard to buy sometimes, so any ETF like this may not be able to actually track the index it’s following, in this case the Market Vectors Emerging Markets Rare Earth/Strategic Metals Index.

A few weeks ago, I wrote that most individual investors need fewer than 10 ETFs for a fully diversified portfolio. I stand by that, but that’s not to say there’s no place for a fund like this. You and your clients just need to be very careful and make sure it fits into their portfolio in a sensible way. If clients are coming to you and talking about this fund, start asking questions. Press a little bit to see if they really have a good reason to want this investment, beyond the fact that it’s the new sexy thing to own. Had they even known about rare earth metals before China began shaking things up? What is their projected growth rate is for this industry; what is the projected growth rate from Wall Street; how about the risks and opportunities? Be sure they know when there is a wide spread between the bid and ask in an ETF’s price, that means there is not a lot of volume. Which means that it could be tough to sell down the road.

Maybe your client really does have a well thought-out reason for buying this. And maybe they have a long-term horizon in mind so these investments can make sense for them. But if not, you’re better off talking about the basics with them yet again.