Copper is a commodity that behaves according to market fluctuations. Prices for this industrial metal go up and down with business cycles. The past year has been unique, as the Corona virus has directly affected construction in a negative way. There are certain sectors of the economy that are beginning to open up with the “new normal” for the world. This change allows an increase in social interaction in which business activity increases. Copper prices are driven by supply and demand. The recent pause in the activity of industries that use copper has created a period of lower demand, but things are changing. Copper exchange-traded funds track the prices of the widely used industrial metal. It represents a more stable investment strategy within the copper market. Although there are several strategies for investing in copper, ETFs offer slightly less volatility than more direct equity investments. Here are 5 copper ETFs you should consider to diversify your portfolio.
5. United States Copper Fund Index (CPER)
The United States Copper Index Fund is a private commodity group investment design. Investor contributions are used to trade commodity futures contracts with a focus on maximizing profits through leveraged trading. It tracks the total return of the SummerHaven Copper Index, which reflects the performance of your copper futures portfolio. The futures contracts are backed by United States Treasury bills with a duration of three months. The contracts maintain exclusivity in copper futures. USCF is the issuing company formed on November 15, 2011, with $ 36.6 million in assets under management and 11.6% of total 1-year returns, according to Investopedia. It is ranked as one of the best performing copper ETFs with a pure approach that excludes the combination of other interests in commodities.
4. Global X Copper Miners ETF (COPX)
COPX operates as a replica of the Solactive Global Copper Miners Index, composed of common shares, GDRs and ADRs of some global companies within the copper market mining industry. The approach this ETF takes is equity-based on copper exposure. This fund invests in copper-exclusive copper mining entities offering a narrower and more copper-focused portfolio according to the ETF database. The COPX ETF has an AUM of $ 93.6 million. The rate charged is 65 basis points per year. The trading volume is approximately 64,000 shares, which predicts a return of 19.2% in 12 months. It provides investors with exposure to copper mining companies and is useful for portfolio diversification without the broad focus of including other interests in commodities.
3. First Trust Global Copper Index (CU)
CU invests in shares of companies active in the copper mining industry. This strategy is an indirect approach to investing in copper. CU’s underlying securities are comprised of companies that are not only engaged in copper. Other metals also for a more diverse and comprehensive portfolio approach. The appeal of CU is that it takes a capital approach that adds exposure to copper without the negative associations of future-based strategies. The spot price of metals is strongly correlated with the profitability of the listed companies that depend on copper prices. The weighting methods for the distribution of funds are linear and are based on the exposure of the income to the copper production of each security. Raw materials within the scope of the CU include copper, silver, gold, and other metals.
2. iPath Dow Jones-UBS Total Return ETN (JJC)
JJC is the oldest publicly traded copper product on the market. It is an ETN that exists in futures-based strategies with potential credit risks. It is directly linked to the total return of the Dow Jones UBS Commodity Subindex. The JJC is an index composed of a single futures contract focused on copper. The strategy of this ETN by design exposes investors to changes in the spot price of copper. It also includes the slope of the futures curve. It is an alternative means of accessing the scope of copper futures contracts.
1. Total return of the Bloomberg iPath Series B ETN (JJCB) copper subindex
According to Nasdaq.com, Barclays Capital established the JJCB ETN in January 2018. The purpose of this ETN is to provide exposure to the price of copper futures. Joined industrial metals ETFs at a time when oil prices …