Investing in Copper Producer ETFs and ETNs

Shelves of copper bars
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Gold and silver may come to mind when you say "precious metals." Still, plenty of other investment choices fall under the precious metals umbrella. Copper, for instance, is a key component of electronics. That's worth noting in our digital era.

Some believe copper has room to grow. Others believe it's overplayed. Whether you are bullish or bearish, copper presents an investment opportunity. It's easy to add this commodity to your portfolio through a copper exchange-traded fund (ETF) or exchange-traded note (ETN).

Whether you're looking to hedge risk, invest in copper, or diversify your portfolio, copper ETFs and ETNs give you instant access to the copper sector. Meanwhile, you'll enjoy the benefits—some of them tax advantages—that come with ETF investments.

Key Takeaways

  • Copper is a valid investment for creating returns, made easy by using ETNs and ETFs.
  • Several copper ETNs and ETFs can give you exposure to the copper producer market.
  • Precious metals like copper can be volatile, so do your research before investing in a copper ETN or ETF.

Copper Producer ETFs and ETNs

Below are three examples of ETFs and ETNs that let you add copper exposure to your portfolio. Keep in mind that it isn't unusual for a financial institution to modify, add, or remove ETFs and ETNs from the market. While this information is current as of Jan. 26, 2020, it's best to further research these products to ensure they still serve your investment goals.

CPER: United States Copper Index ETF

The U.S. Copper Index Fund tracks the Summer Haven Copper Index Total Return. The index includes two or three eligible copper futures contracts. They are chosen monthly, based on quantitative formulas tied to the prices of the Eligible Copper Futures Contracts developed by Summer Haven Indexing.

COPX: Global X Copper Miners ETF

This ETF tracks copper performance as measured by the Solactive Global Copper Miners Total Return Index. Whereas CPER holds no more than three copper futures contracts, COPX invests directly in a range of copper mining companies around the world. Its two largest holdings by market value are the China-based company Zijin Mining and the U.S.-based company Freeport-McMoRan. These companies mine more than copper. So while this ETF replicates a copper index, it does include exposure to other mining industries.

JJCTF: iPath Bloomberg Copper Subindex Total Return ETN

This copper ETN comes from iPath ETNs, a series of products offered by Barclays. JJCTF tracks the Barclays Copper Subindex Total Return. Like CUPM, this copper ETN uses a futures contract on the commodity of copper, though it holds just one. As of Jan. 26, 2020, that one futures contract is the Copper High Grade futures contract traded on the COMEX.

Taking the Next Step With Copper ETFs and ETNs

If any of these copper funds or notes piqued your interest, you can get more information on them by following source links. Understand just what you're buying before you invest in any product. That's especially true with ETNs built from complex derivatives like futures, options, or forwards.

No investment asset is risk-free. So make sure you understand the disadvantages, limitations, and reactions of each product to different market conditions before you buy.

You should also research the copper industry as a whole. Go beyond the performance of any one investment product. For example, 2019 was a volatile year for copper. Analysts with S&P Global noted trade tensions and tariffs between China and the U.S. while writing about the decline in copper prices in 2019. Some investors believe that this recent price decline presents a buying opportunity. Others will prefer to steer clear of the copper industry for the time being. Whatever your stance, it's important that you do the research and digest a wide range of arguments before investing.

The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.