When it comes to precious metals, most people first think of gold or maybe silver, but not usually copper. However, there is no doubt that copper is now more of a popular precious metal than ever before. There are many a story of people scavenging abandon buildings and stripping the wires and pipes for copper. And at one point pennies were made of steel since copper was in short supply during the war.
However, while others may feel copper is a hot commodity, you may feel it is over played. But whatever your opinion, bullish or bearish, it becomes an investment opportunity for you. And what easier way is there to give your portfolio exposure to the copper market than a copper ETF or ETN?
Whether you are looking to hedge risk, invest in copper, or diversify your portfolio, copper funds and notes give you instant access to the copper sector along with their many benefits, such as the tax advantages.
And while we recently lost two copper ETP’s there are five other copper ETFs and ETNs on the market. And as new products are launched, I’ll continue to update this article, so check back often. In the meantime, here is the complete list of copper ETFs and ETNs trading on exchanges today…
This copper ETF from Global X correlates with the Solactive Global Copper Miners Index, which consists of companies involved in the exploration, production, and mining of copper. Some of the top holdings include Inmet Mining Corporation, Grupo Mexico and Hudbay Minerals.
The US Copper Index Fund tracks the Summer Haven Copper Index Total Return Index, which focuses on risk adjusted returns on a portfolio of copper futures contracts. The index includes two to three eligible copper futures contracts that are selected on a monthly basis based on quantitative formulas relating to the prices of the Eligible Copper Futures Contracts developed by Summer Haven Indexing.
This copper fund from First Trust follows the ISE Global Copper Index and like COPX, the holdings in the fund and the index are stocks of companies involved in the copper mining industry. The selection process of the companies in the benchmark is based on revenues that are derived from the sale of copper for each firm. Some of those holdings include Xstrata, Southern Copper Corporation and Freeport McMoran Copper and Gold, Inc.
Our first copper ETN on the list comes from Barclay’s iPath, which correlates with the Barclays Copper Pure Beta Total Return Index. And like CPER, the exchange traded note utilizes futures contracts in the Copper markets to emulate its benchmark. And according it iPath, the Index may roll into one of a number of futures contracts with varying expiration dates, as selected using the Barclays Pure Beta Series 2 Methodology.
This is another copper ETN from Barclay’s iPath, but this one is linked to the Dow Jones-UBS Copper Sub Index Total Return. And like CUPM, this copper ETN utilizes futures contract on the commodity of copper (currently the Copper High Grade futures contract traded on the COMEX), which is included in the Dow Jones-UBS Commodity Index Total Return.
So there is your most update list of copper ETFs and ETNs. We’re currently just shy of half a dozen, but there are a few in the works. And if you click on any of the copper funds or notes above, they will take you to a fact sheet that gives you a little more information about each product. So if you feel copper is a strong commodity since it's used in a lot of products like coins, wires and pipes, then you have some nice choices above.
And as I said above, I will update this list as new copper exchange traded products come to market or if any are redeemed or delisted. In fact, we have a new copper ETF in the works from JP Morgan - JP Morgan XF Physical Copper Trust. There is no launch date as of yet, nor is there a ticker. But once that is public, I will adjust this list to include the new copper fund. In the meantime, make sure to research each note or fund thoroughly before making any trades.
No investments asset is risk-free, so know the disadvantages, limitations and how each product will react to different market conditions. Also, it might make sense to have a look under the hood and see what is in your ETF, such as derivatives like futures, options, forwards, etc.
If you have any questions about any of the above copper ETFs or ETNs, be sure to consult a financial professional such as an advisor, analyst, planner, or broker. But once you are confident in your decision, then good luck!
Disclaimer – I have no positions in any of the copper exchange traded products at the time of this publication.