There’s no doubt that when it comes to metals, gold and precious metals get most of the attention. That's true for the average person walking down the street, and it's true for the average investor, as well. Investors flock to gold exchange-traded funds (ETFs) and precious metals ETFs as relatively safe investments when market volatility spikes. However, that doesn’t mean investors should forget about the “other” metal ETFs.
Base metals and industrial metals are important commodities in sectors such as construction and technology, so they shouldn’t be ignored. Whether you are looking to diversify your portfolio or seize a perceived opportunity with metal commodities, you should consider metal ETFs for your investing strategy.
Breaking Down Industrial Metals ETFs
There are quite a few different types of metal ETFs to consider for your portfolio. They can vary by region, utilize different investment strategies, or specialize in a specific type of metal.
Like any type of ETF, these products allow investors to enter certain sectors or invest in certain markets without loading up on equities or battling index basket pricing. Instead, you can get instant exposure to your desired market with one easy transaction.
Some metal funds target metals as commodities, using futures to track the underlying target assets. Other ETFs target company stocks that are involved in the mining, exploration, or distribution of the metals. There are also inverse and leveraged metal ETFs, which use advanced strategies to either short or outperform the underlying index in the near-term. International metal ETFs allow investors to add exposure from different countries. Metal exchange-traded notes (ETNs) offer a similar investment product as ETFs, but with some key differences.
List of Base and Industrial Metals ETFs and ETNs
As with any investment—a company stock, mutual fund, ETF, or otherwise—please make sure you thoroughly research these products before placing any trades on them (either long or short). Conduct your due diligence, watch how these funds react to different market conditions, take a look under the hood and see what is in the funds.
Furthermore, while this list is current as of Aug. 18, 2021, ETFs and ETNs are constantly in flux. The name, ticker symbol, investment goals, or holdings in any of these products could have since changed.
ETFs have many advantages, but they have disadvantages, as well (as does any investment). It is important to understand the investment vehicle before you trade it. If you have any questions or concerns, make sure you consult a stockbroker, a financial advisor, or another financial industry professional.
With those disclaimers out of the way, here's a list of industrial metal ETFs and ETNs to kickstart your research:
- CPER - United States Copper Index Fund
- DBB - Invesco DB Base Metals Fund
- JJMTF - iPath Bloomberg Industrial Metals Subindex Total Return ETN
- JJCTF - iPath Bloomberg Copper Subindex Total Return ETN
- PICK - iShares MSCI Global Select Metals & Mining Producers ETF
- REMX - VanEck Vectors Rare Earth/Strategic Metals ETF
- RJZ - ELEMENTS Rogers International Commodity Index Metals Total Return ETN
- SLX - VanEck Vectors Steel ETF
- UCIB - ETRACS CMCI Total Return ETN Series B
- XME - SPDR S&P Metals & Mining ETF
Frequently Asked Questions (FAQs)
What is an ETF?
An exchange-traded fund (ETF) is a security that tracks an index, commodity, sector, or another asset. ETFs are traded on stock exchanges and can be bought and sold each trading day. ETFs typically have lower fees and commissions than mutual funds.
What is an ETN?
Financial institutions usually issue exchange-traded notes (ETNs). They're a type of bond that tracks an index. At maturity, the ETN pays the return of the index it tracks and the principal paid, less any fees. It doesn't pay interest while you hold the note, however. If the index stays the same or goes down, the ETN owner would receive less at maturity than invested.