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Copper exchange-traded funds (ETFs) are designed to track the price of copper, an industrial metal with a wide variety of applications, such as in manufacturing, electronics, and construction. Copper is considered a cyclical commodity whose price fluctuates in tandem with economic cycles, rising when the economy grows and falling when the economy slows. Because of its widespread use and its cyclical nature, copper is often used by investors as a hedge against inflation. Thus, copper ETFs offer an added hedging tool for investors in a volatile market.
Two of the copper ETFs listed below gain exposure to the commodity through futures-based contracts, while the other is exposed to stocks of copper companies. The difference in the types of exposure means the funds may face differences in performance and risk. Also, all three have very low assets under management (AUM), making them relatively illiquid compared to larger ETFs in other sectors. Such illiquid funds may be more difficult to buy or sell, and you may incur higher trading costs to do so, which increases the risk involved, especially when linked to volatile commodity prices.
The copper ETF universe is comprised of about 3 distinct ETFs, excluding inverse and leveraged ETFs. Despite posting a negative total return over the past 12 months, the best-performing copper ETF is the iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC). We examine it and the two other copper ETFs below. All numbers in this story are as of March 23, 2020.
- Performance over 1-Year: -26.5%
- Expense Ratio: 0.45%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 6,585
- Assets Under Management: $10.3 million
- Inception Date: January 17, 2018
- Issuing Company: Barclays Capital
JJC is structured as an exchange-traded note (ETN), a type of unsecured debt security that tracks an index and whose price fluctuates like that of stocks. The index tracked by JJC is the Dow Jones-UBS Copper Subindex Total Return, an index of a single copper futures contract.
- Performance over 1-Year: -26.9%
- Expense Ratio: 0.80%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 17,219
- Assets Under Management: $8.2 million
- Inception Date: November 15, 2011
- Issuing Company: USCF
CPER is structured as a commodity pool, a private investment structure that combines investor contributions in order to trade futures and commodities markets. The fund seeks to track the SummerHaven Copper Index Total Return, which is designed to reflect the performance of the returns from a portfolio of copper futures contracts that are fully collateralized with 3-month U.S. Treasury Bills.
- Performance over 1-Year: -52.0%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 2.61%
- 3-Month Average Daily Volume: 76,432
- Assets Under Management: $37.2 million
- Inception Date: April 19, 2010
- Issuing Company: Global X
COPX is an ETF that provides investors with exposure to copper through the stocks, ADRs and GDRs of copper companies rather than copper-based futures contracts. The fund invests in equities with a range of market capitalizations and uses a blended strategy, investing in both growth and value stocks. Its top three holdings include China-based Zijin Mining Group Co. Ltd. (601899) and Jiangxi Copper Co. Ltd. (600362), and Southern Copper Corp. (SCCO).
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