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Best (and Only) Copper ETFs for Q1 2021

CPER and JJC are the best (and only) copper ETFs for Q1 2021

Copper exchange-traded funds (ETFs) are designed to track the price of copper, an industrial metal used in a wide variety of applications in manufacturing, electronics, and construction. Copper is considered a cyclical commodity whose price fluctuates in tandem with economic cycles, rising when the economy grows and falling when the economy slows. Due to its widespread use, some investors use copper and other commodities to diversify their portfolios. Because copper rises when inflation is accelerating, the metal is also seen as a hedge against rising prices.

 

KEY TAKEAWAYS

  • Copper prices have slightly outperformed the broader market in the past year.
  • The best (and only) copper ETFs, ranked by 1-year trailing total returns, are CPER and JJC.
  • The sole holding of each of these ETFs is copper futures.

 

There are 2 distinct copper ETFs that trade in the U.S. Copper prices have risen 17.7% over the past 12 months while the S&P 500 has posted a total return of 16.8%, as of November 10, 2020.1 2 The best-performing copper ETF, based on performance over the past year, is the United States Copper Index Fund (CPER). We examine the best (and only) copper ETFs below. All numbers below are as of November 11, 2020.

 

ETFs with very low assets under management (AUM), less than $50 million, usually have lower liquidity than larger ETFs. This can result in higher trading costs which can negate some of your investment gains or increase your losses.

 

United States Copper Index Fund (CPER)

  • Performance over 1-Year: 16.8%
  • Expense Ratio: 0.80%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 62,697
  • Assets Under Management: $28.3 million
  • Inception Date: November 15, 2011
  • Issuer: USCF

 

CPER is an ETF that is structured as a commodity pool, a private investment structure that combines investor contributions in order to trade commodity futures contracts. These commodity pools act as a single entity in order to increase leverage in trading with the goal of maximizing profits. The ETF seeks to track the SummerHaven Copper Index Total Return, which is designed to reflect the performance of the returns from a portfolio of copper futures contracts that are fully collateralized by 3-month U.S. Treasury Bills. CPER invests exclusively in copper futures.

 

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

  • Performance over 1-Year: 15.4%
  • Expense Ratio: 0.45%
  • Annual Dividend Yield: N/A
  • 3-Month Average Daily Volume: 6,411
  • Assets Under Management: $19.0 million
  • Inception Date: January 17, 2018
  • Issuer: Barclays Capital

 

JJC is structured as an exchange-traded note (ETN), a type of unsecured debt instrument that tracks an underlying index of securities and trades like a stock. ETNs share similar characteristics to bonds but they do not make periodic interest payments. The fund is designed to provide exposure to the Bloomberg Copper Subindex Total Return, an index that consists of one copper futures contract: the Copper High Grade futures contract traded on the COMEX.5 Like CPER above, JJC invests exclusively in copper futures.

 

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