Two Copper ETFs Offer Broad Exposure as the Metal Rebounds

Falling dollar, China's easing COVID restrictions are behind copper's gains

Recycled copper.
Copper ETFs.

Two copper exchange-traded funds (ETFs) that are outperforming the S&P 500 Index offer investors exposure to the rebounding commodity amid tight global supplies and optimism about easing COVID restrictions in China, the world's second-largest economy.

The iPath Series B Bloomberg Copper Subindex Total Return ETN and the United States Copper Index Fund, which own copper futures, have outperformed the 15% decline of the benchmark Bloomberg Copper Subindex and 19% drop in the S&P 500 Index during the past year as of Nov. 9.

Key Takeaways

  • The two copper exchange-traded funds (ETFs), ranked by one-year trailing total returns, are the iPath Series B Bloomberg Copper Subindex Total Return ETN and the United States Copper Index Fund.
  • Both copper funds have outperformed the broader market and a key copper index in the last year.
  • The holdings of each of these funds are various copper futures contracts.

The two funds are the only distinct copper ETFs that trade in the United States, excluding inverse or leveraged funds as well as those with under $50 million in assets under management (AUM). These ETFs track the price of copper and do not invest in copper mining companies.

The price of copper fell by about a third from its March high as investors focused on central bank rate increases a slowing global economy, which could lower demand for copper. The metal since then has jumped due to tight global supplies and other factors.

We examine the two copper ETFs below. All numbers are as of Nov. 11.

iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC)

  • Performance Over One Year: -10.4%
  • Expense Ratio: 0.45%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 35,159
  • Assets Under Management: $60.8 million
  • Inception Date: Jan. 17, 2018
  • Issuer: Barclays Capital

The fund is structured as an exchange-traded note (ETN), a type of unsecured debt instrument that tracks an underlying index of securities and trades like a stock. ETNs share characteristics similar to those of bonds, but they don't make periodic interest payments. JJC is designed to provide exposure to the Bloomberg Copper Subindex Total Return, which reflects returns that are potentially available through an unleveraged investment in copper futures contracts on copper. The fund holds only copper futures.

Because the ETN is linked to an index of futures contracts on a single commodity, it's less diversified than other funds and is likely to experience more volatility than other funds or investments.

United States Copper Index Fund (CPER)

  • Performance Over One Year: -11.8%
  • Expense Ratio: 0.88%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 108,344
  • Assets Under Management: $175.8 million
  • Inception Date: Nov. 15, 2011
  • Issuer: Marygold Cos, Inc.

This ETF is structured as a commodity pool, a private investment structure that combines investor contributions to trade commodity futures contracts. The pools act as a single entity aimed at increasing leverage and trading profits.

CPER tracks the SummerHaven Copper Index Total Return, which aims to reflect the returns from a portfolio of copper futures contracts on the COMEX exchange. The index is comprised of either one or three copper futures contracts that are selected each month based on quantitative formulas. The futures contracts are fully collateralized by cash, cash equivalents or U.S. Treasury bills.

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