Investing in Copper Producer ETFs and ETNs

Shelves of copper bars
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Gold and silver may come to mind for most people when "precious metals" are mentioned, but there are plenty of other investment opportunities that fall under the precious metals umbrella. Copper, for instance, is an important component of electronics, and that gives it value worth noting, especially in the digital era.

Some believe this commodity has room to grow, while others believe it's overplayed. Whatever your opinion—bullish or bearish—copper presents an investment opportunity. As with many industries and indexes, one of the easiest ways to give your portfolio exposure to the copper market is with 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, such as some tax advantages, that come with ETF investments.

Copper Producer ETFs and ETNs

Below are three examples of ETFs and ETNs that allow investors to add copper exposure to their portfolios. 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 that 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 either two or three eligible copper futures contracts that are selected monthly, based on quantitative formulas relating 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. It's two largest holdings by market value are the China-based company Zijin Mining and the U.S.-based company Freeport-McMoRan. Note that these companies mine more than copper, so while this ETF replicates a copper index, it does technically 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 utilizes 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 dig into more information on them by following source links. You must understand exactly what you're buying before you invest in any product, and that's especially true with ETNs that are built out of complicated 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, 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, while 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.

Article Sources

  1. Copper Development Association. "Copper: Properties and Applications." Accessed Jan. 26, 2020.

  2. Fidelity Investments. "ETFs vs. Mutual Funds: Tax Efficiency." Accessed Jan. 26, 2020.

  3. United States Commodity Funds. "CPER: United States Copper Index Fund." Accessed Jan. 26, 2020.

  4. Global X ETFs. "Copper Miners ETF." Accessed Jan. 26, 2020.

  5. Freeport-McMoRan. "About Us." Accessed Jan. 26, 2020.

  6. Zijin Mining. "Mines." Accessed Jan. 26, 2020.

  7. iPath ETNs. "iPath Bloomberg Copper Subindex Total Return ETN." Accessed Jan. 26, 2020.

  8. S&P Global. "Copper Fundamentals Fly Out the Window Over Trade Jitters." Accessed Jan. 26, 2020.