2 Copper ETFs for Q4 2021

Copper exchange-traded funds (ETFs) are designed to track the price of copper, an industrial metal used in a wide variety of applications 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. Due to its widespread use, some investors use copper and other commodities to diversify their portfolios. Because copper rises when inflation is accelerating, the metal is also seen as a hedge against rising prices.

Key Takeaways

  • Copper futures have outperformed the broader market in the past year.
  • The two copper ETFs, ranked by one-year trailing total returns, are CPER and JJC.
  • The holdings of each of these ETFs are exclusively comprised of copper futures contracts.

There are two distinct copper ETFs that trade in the U.S., excluding leveraged and inverse funds, as well as those with fewer than $50 million in 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 risen 49.2% over the past 12 months, as of Aug. 2, 2021. By comparison, the S&P 500 posted a total return of 35.2% in this same time frame. The best copper ETF, based on performance over the past year, is the United States Copper Index Fund (CPER). We examine the two copper ETFs below. All numbers are as of Aug. 2, 2021.

United States Copper Index Fund (CPER)

  • Performance Over One-Year: 51.2%
  • Expense Ratio: 0.80%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 392,068
  • Assets Under Management: $287.0 million
  • Inception Date: Nov. 15, 2011
  • Issuer: Concierge Technologies

CPER is an ETF that is structured as a commodity pool, a private investment structure that combines investor contributions in order to trade commodity futures contracts. These commodity pools act as a single entity in order to increase leverage in trading with the goal of maximizing profits. CPER 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 by three-month U.S. Treasury Bills.

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

  • Performance Over One-Year: 50.9%
  • Expense Ratio: 0.45%
  • Annual Dividend Yield: N/A
  • Three-Month Average Daily Volume: 80,926
  • Assets Under Management: $88.7 million
  • Inception Date: Jan. 17, 2018
  • Issuer: Barclays Capital

JJC 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 do not make periodic interest payments. JJC is designed to provide exposure to the Bloomberg Copper Subindex Total Return, which reflects the returns that are potentially available through an unleveraged investment in the futures contracts on copper. It may be appealing as an inflation hedge. Like CPER, JJC invests exclusively in copper futures.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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