Copper exchange traded funds (ETFs) are designed to track the price of copper, an industrial metal used in a wide range of applications in manufacturing, electronics and construction. Copper is considered a cyclical commodity whose price moves in tandem economic cyclesrising when the economy grows and falling when the economy slows.
Because of its wide use, some investors use copper and others commodities to diversify their portfolios. Because copper rises when inflation is accelerated, the metal is also seen as a Hedge against rising prices.
- Copper futures have underperformed the broader market over the past year.
- Two copper exchange-traded funds (ETFs), ranked by total one-year returns, are JJC and CPER.
- The holdings of each of these ETFs are various copper futures contracts.
There are only two distinct copper ETFs traded in the United States, with an exception inverse or leverage effect funds, as well as those with less than $50 million assets under management (AUM). These ETFs track the price of copper and do not invest in copper mining companies.
Copper futures prices as measured by the S&P GSCI Copper Index have fallen by 12.9% over the past 12 months. For comparison, S&P 500 published a total return -2.5% over the same period. This performance data is as of August 17, 2022.
The top copper ETF based on performance over the past year is the iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC).
We examine two copper ETFs below. All figures are as of August 17, 2022. In order to focus on the funds’ investment strategy, the best holdings listed for each ETF exclude cash holdings and purchased-for-sale holdings securities lending returns except in unusual cases, such as when the cash portion is exceptionally large.
- Performance in one year: -15.2%
- Cost ratio: 0.45%
- Annual Dividend yield: ON
- Three-month average per day Volume: 26,066
- Assets under management: $69.9 million
- Start date: January 17, 2018
- Issuer: Barclays Capital
JJC is structured as an exchange traded note (ETN)type unsecured debt an instrument that tracks an underlying security index and trades like a stock. ETNs have similar characteristics to bonds, but do not make regular interest payments.
JJC is designed to provide exposure to the Bloomberg Copper Subindex Total Return, which reflects the returns potentially available through an unleveraged investment in futures contracts on copper. It can be attractive as hedging against inflation. JJC invests exclusively in copper futures.
Because the ETN is linked to an index composed of futures contracts on a single commodity, the ETN is less diversified than other funds. As a result, ETN can experience more volatility than other types of funds or investments.
- Performance in one year: -16.1%
- Expense ratio: 0.88%
- Annual Dividend Yield: N/A
- Three-month average daily volume: 148,158
- Assets under management: $149.9 million
- Start date: November 15, 2011
- Issuer: Marygold Cos, Inc.
CPER is an ETF that is structured as a commodity funda private investment structure that combines investors’ contributions to the business commodity futures. These commodity groupings act as one entity to increase influence in trading to maximize profit.
CPER seeks to track the total return of the SummerHaven Copper Index, which is designed to reflect the return performance of a portfolio of copper futures contracts that are fully secured within three months in the US Cash receipts.
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