Increasing prices and decreased global supply have been factors helping to drive interest in copper investments, with the metal hitting a 4.5-year high in June. However, copper prices have slipped about 15% since hitting those multi-year highs, in response to concerns about the damage to global economic growth – amid the ongoing trade war between the United States and its partners. The stronger dollar has also played a role in copper's recent pullback. Longer-term, the outlook for the sector is more optimistic.
- Rising prices and shrinking global supply have helped popularize copper investments.
- Copper prices have been impacted strongly by Chinese trade developments.
- Declining copper inventories in China have contributed to the need for fresh supply.
The Copper Market
Developments in China and Chinese trade tend to impact copper prices as well, as China is the world's biggest consumer of industrial metals, encompassing around 50% of global demand. Copper is included in that group and demand for the metal is substantial in China, according to recent reports. China has also experienced falling inventories lately, adding to the need for new supply. On the downside, China recently announced tariffs on over 5,200 goods imported from the United States, including copper ore. Analysts say that the tariffs could eventually have an impact on the pace of growth in the country; however, growth concerns are tempered by the fact that copper imports are fairly minimal, accounting for just 3% of total U.S. exports to China.
Investors speculating on the copper market have a lot of options, but one of the easiest is through ETFs. These ETFs have posted small year-to-date losses, along with the price of the metal itself, which has dipped 15% off the multi-year highs hit in June. However, longer-term forecasts for copper prices are upbeat amid global demand. That should boost these ETFs.
Here are the top three ETFs in the investment market that are focusing exclusively on copper. (One copper ETF that we previously covered, iPath Pure Beta Copper (CUPM), was shuttered on April 11, 2018.) All data is accurate as of October 1, 2019.
Global X Copper Miners ETF (COPX)
- Issuer: Global X
- Average Volume: 32,500
- YTD Performance: -4.83%
- Expense Ratio: 0.65%
- Assets under Management: $45.5 million
- Price: $16.43
COPX has been one of the market’s top-performing copper ETFs but is lagging through 2019. In 2017, COPX returned 36.75%. However, since that time the fund has slipped along with the rest of the industry. The Fund focuses on copper mining companies as opposed to the futures prices of physical copper. That has enabled COPX to give investors a high return, as mining companies tend to be more volatile than copper futures.
The ETF seeks to track the holdings and performance of the Solactive Global Copper Miners Total Return Index. The Index includes a selection of global copper mining firms. Top holdings include Teck Resources LTD and First Quantum Minerals.
iPath Bloomberg Copper Subindex Total Return (JJC)
- Issuer: iPath
- Average Volume: 3,300 shares
- YTD Performance: -0.75%
- Expense Ratio: 0.45%
- Assets under Management: $51.59 million
- Price: $39.75
JJC is a fund that seeks to track the return of copper. As an exchange-traded note (ETN), this fund uses debt securities to achieve its objective. The fund’s managers target returns that match the Bloomberg Copper Subindex Total Return index. This index includes one futures contract on the commodity of copper.
JJC is one ETN in a series of fund’s that seek to replicate the returns of sub-indexes of the Bloomberg Commodity Index Total Return. In 2017, the Fund had a return of 23.3%. The comparable return for the Bloomberg Commodity Index Total Return was 1.7%. In 2018, the fund declined with the broader industry.
US Copper Index ETF (CPER)
- Issuer: United States Commodity Funds LLC
- Average Volume: 8,600 shares
- YTD Performance: -0.95%
- Expense Ratio: 0.80%
- Assets under Management: $8 million
- Price: $15.83
CPER is an index fund that seeks to track the performance of the SummerHaven Copper Index Total Return. Components of the Index are selected monthly. The Index may include either two or three futures contracts from varying exchanges. The Fund uses an index replication approach to track the Index. Its holdings include the underlying copper futures contracts included in the SummerHaven Copper Index. Its portfolio also includes U.S. Treasuries and cash instruments for liquidity and maintenance of futures contracts.
In 2017, the Fund had a YTD performance of 28.8%. In 2018 and year-to-date 2019, it has declined.