The rising demand for copper in construction, manufacturing and industrial activities, amid supply constraints and low inventory, pushed copper prices to a nine-year high in February, with futures at $9,617 a tonne. The futures hit $9,3511 a tonne yesterday on an increase in demand and a decline in the U.S. dollar. 

Copper’s bull run is likely to continue in the near term, given the Biden administration’s focus on adopting clean energy and improving America’s infrastructure through a proposed $2 trillion-plus investment across various sectors. In fact, rising copper demand is expected to push the global Copper market to grow at a CAGR of 4.9% over the next four years to hit $271.46 million by 2025.

Given this backdrop, we think Global X Copper Miners ETF (COPX - Get Rating), United States Copper Index Fund ETV (CPER - Get Rating), and iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC - Get Rating) are well positioned to deliver solid returns.

Global X Copper Miners ETF (COPX - Get Rating)

COPX provides investment results that correspond to the price and yield performance of the Solactive Global Copper Miners Total Return Index, which measures the broad-based equity market performance of global companies in the copper mining industry. The fund invests at least 80% of its  assets in the securities of the underlying index and in its American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs). COPX has $815.60 million in assets under management. The ETF’s major holdings include Vedanta Limited (VEDL), First Quantum Minerals Ltd. (FM) and Freeport-McMoRan, Inc. (FCX).

COPX has an expense ratio of 0.65%, which is higher than the category average of 0.46%. It has an MSCI ESG Fund Rating of BB. The ETF distributes $0.39 in dividends annually, which translates to a dividend yield of 1%. Its four-year average dividend yield is 1.72%.

COPX is currently trading 211.1% above its 52-week low of $12.17. The ETF has gained more than 192% over the past year and 100.8% over the past nine months. The ETF’s net inflows amounted to $80.62 million over the past month.

COPX’s POWR Ratings reflect this promising outlook. The ETF has an overall A grade,  which equates to Strong Buy rating in our proprietary ratings system. COPX also has an A for Trade Grade and Buy & Hold Grade. Of the 112 ETFs in the A-rated Commodity ETFs group, COPX is ranked #13.

United States Copper Index Fund ETV (CPER - Get Rating)

CPER is a commodity pool that tracks the performance of a portfolio of copper futures contracts in the SummerHaven Copper Index Total Return, a single-commodity index that trades on Commodity Exchange, Inc. (COMEX). The fund uses a complex optimization process developed by SummerHaven Index Management to select two or three contracts each month to mitigate the effects of contango. The fund has approximately $215.90 million in assets under management (AUM). The ETF’s major holdings include Copper FUTURES, Goldman Sachs Financial Square Government Fund and U.S. Treasury Bills.

CPER has a 0.76%expense ratio, which is higher than the category average of 0.58%. CPER is currently trading 93.7% above its 52-week low of $13.53. The ETF has gained 77.7% over the past year and 45.1% over the past nine months. The ETF’s net inflows were$3.60 million over the past month.

CPER’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall A grade, which equates to Strong Buy rating in our proprietary ratings system. CPER also has an A for Trade Grade and Buy & Hold Grade. It is ranked #24 in the same group.

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

JJC is an exchange-traded note that offers exposure to futures contracts in the copper industry rather than  direct exposure to the physical commodities. The ETN provides investors with a cash payment at the note’s scheduled maturity or early redemption, based on the performance of its underlying index, the Bloomberg Copper Subindex Total Return. The index continues tracking each contract until shortly before expiration. JJC has $61.40 million in assets under management.

JJC has an expense ratio of 0.45%, which is slightly lower than the category average of 0.58%. JJC is currently trading 87% above its 52-week low of $34.26. The ETF has gained 77.9% over the past year and 43.7% over the past nine months. The ETF’s net inflows amounted to $28.06 million over the past three months. 

COPX shares were trading at $38.36 per share on Tuesday afternoon, down $1.18 (-2.98%). Year-to-date, COPX has gained 26.35%, versus a 10.47% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...

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