What Are Copper ETFs?
There are multiple options for investors looking to bet on copper prices, and exchange-traded products offer a nice choice for investors interested in low maintenance. Copper is included in several broad-based metal ETFs and ETNs, generally along with other industrial metals such as tin, aluminum, and lead. There is also a pure play option; the iPath Dow Jones-UBS Copper ETN (JJC) is linked to an index that consists of futures contracts on copper. JJC delivers returns available through a futures-based strategy, to the ETN will not always match up perfectly with movement in spot prices. Also, it is worth considering that an investment in JJC exposes investors to the credit risk of the institution, as ETNs are debt instruments linked to the return of a particular asset class.
International investors may have more options for exposure to copper through ETFs; in London, ETF Securities offers a physically-backed product that could be appealing to investors frustrated with the nuances of contango and backwardation. There are also inverse and leveraged options for international investors.
There are also options for accessing copper prices indirectly through stocks of companies engaged in production of the metal, and there are multiple ETFs focusing on this corner of the materials market. The two primary options are the Global X Copper Miners ETF (COPX) and the First Trust ISE Global Copper Index Fund (CU). Both invest in stocks of companies who derive revenue from the sale of copper, though COPX offers more of a pure play on copper miners.