6 Best Copper ETFs in Canada for April 2024

If you are looking to invest in copper but don’t want to buy the metal physically or invest through futures, purchasing an ETF is a great alternative.

Copper has an incredible number of applications as a component of:

• Cars
• Electrical Applications
• Architecture
• Tubing and pipelines

We will cover some of the best copper ETFs in Canada below and discuss some of their features.

Pros and Cons of Copper ETFs

Since copper has so many applications across multiple industries, it is a highly in-demand commodity during economic booms.

Since copper futures can be extremely risky and storing large amounts of copper can be impractical, an ETF is a good approach to investing in copper.

Key Factors to Consider When Choosing Copper ETFs

Investing in copper ETFs can be a strategic move, especially given copper’s vast industrial applications. However, choosing the right ETF requires careful consideration. Here are some key factors to contemplate:

1. Type of Exposure: Copper ETFs can vary based on their underlying assets. Some might invest directly in copper stocks, others might focus on copper futures contracts, while some might blend both. Depending on your risk tolerance and investment horizon, decide which type offers the best fit.
2. Geographical Focus: Different regions have varied copper production and consumption dynamics. Some ETFs might focus predominantly on North American miners, while others might offer a global perspective. Consider geopolitical risks, trade policies, and local regulations when evaluating the geographical focus of the ETF.
3. Management Fees: These are costs associated with the management of the ETF and can eat into your returns over time. Always compare the management fees of different ETFs. However, don’t compromise on the quality of the ETF merely for lower fees.
4. Liquidity: An ETF with higher trading volumes generally means more liquidity, ensuring that you can buy or sell shares without causing significant price changes. A more liquid ETF typically has a narrower bid-ask spread, which can reduce the cost of trading.
5. Track Record: While historical performance doesn’t guarantee future results, examining an ETF’s past can provide valuable insights. Look for consistent returns, how the ETF reacted during market downturns, and its performance relative to its benchmark.

Best Copper ETFs in Canada

• Horizons Copper Producers Index ETF (COPP.TO)
• United States Copper Index Fund (CPER)
• Global X Copper Miners ETF (COPX)
• IShares S&P/TSX Global Base Metals Index ETF (XBM.TO)
• BMO Equal Weight Global Base Metals Hedged to CAD Index ETF (ZMT.TO)
• IShares MSCI Global Metals & Mining Producers ETF (PICK)

1. Horizons Copper Producers Index ETF

COPP is an ETF offered by Horizons in Canada. The fund offers exposure to North American-listed stocks actively involved in copper ore mining. It is the only copper-focused ETF currently trading on the Toronto Stock Exchange.

The ETF passively tracks the Solactive North American Listed Copper Producers Index.

The fund is highly concentrated, with the top ten stock holdings making up 80% of the overall fund.

COPP has an extremely short performance track record due to its very recent inception. It is a tiny ETF in terms of assets under management. If COPP fails to attract additional capital in the future, it is likely that it will be closed down.

Although the fund pays distributions annually, Horizons has not committed to regularly scheduled distributions from COPP.

Any currency exposure as a result of investing in US companies is hedged back to the Canadian dollar. This removes the impact of currency fluctuations between the US dollar and the Canadian dollar.

COPP is your only choice if you are looking to invest in a Canadian-listed, copper-focused ETF.

2. United States Copper Index Fund

USCF (United States Commodity Funds) offers a copper futures ETF listed on the New York Stock Exchange, CPER. The ETF is passively managed and looks to track the SummerHaven Copper Index Total Return.

CPER essentially aims to have the same daily percentage price movement as the underlying copper futures index.

The portfolio of copper futures, forwards, and swaps, is collateralized by cash, cash equivalents, and/or US debt with a maturity of two years or less.

For investors that are familiar with trading futures, trading the copper futures directly may be a better option than paying the fairly high MER of CPER.

The ETF has a long performance track record and is large in terms of assets under management.

Since the ETF is listed on the NYSE, it will need to be purchased on the US side of your accounts here in Canada.

If you want exposure to copper futures without directly trading them, CPER is a great alternative to consider.

3. Global X Copper Miners ETF

Global X offers a copper mining stock ETF listed on the New York Stock Exchange. The ETF has approximately 40 holdings and passively tracks the Solactive Global Copper Miners Total Return Index.

COPX is likely one of the most robust copper ETFs that Canadian investors can access, using US dollars on the US side of their accounts. The ETF pays a good yield to investors on a semi-annual basis.

With a long performance track record, COPX is also a very large ETF in terms of assets under management.

COPX is over 30% invested in Canadian companies and also has significant allocations to Australia, the US, and Japan.

With great overall features, COPX does a relatively good job diversifying your copper allocation across geographies and mining companies. It is a top choice to consider when deciding on a copper ETF.

4. iShares S&P/TSX Global Base Metals Index ETF

iShares offers a base metals fund on the Canadian ETF shelf. While not entirely dedicated to copper, there is a significant allocation to copper mining companies, among other base metal mining stocks. This spreads your investment across multiple commodities, helping with diversification.

XBM is passively managed and tracks the S&P/TSX Global Base Metals Index.

The ETF comes with a long performance track record and is a large ETF in terms of assets under management. It pays a very high yield on a semi-annual basis to investors.

XBM currently has over 30 underlying stock holdings but is highly concentrated across its top five holdings. The top five holdings currently make up almost 50% of the fund.

If you are looking for exposure to other base metals as well (not just copper), XBM is an excellent ETF to consider on the shelf here in Canada.

5. BMO Equal Weight Global Base Metals Hedged to CAD Index ETF

BMO also offers a global base metals ETF to Canadians. In contrast to most strategies that use a cap-weighted approach (or index), ZMT follows an equally-weighted strategy, helping with diversification.

ZMT is a passive ETF that tracks the Solactive Equal Weight Global Base Metals Index Canadian Dollar Hedged.

ZMT has approximately a 70% allocation to Canada and the US, with the remainder spread out across other companies around the world.

The ETF is small in terms of assets and has a long performance track record. It offers investors a good distribution yield on an annual basis.

Although ZMT does not invest exclusively in copper companies, it does diversify your investment across copper and other base metals.

Any non-Canadian underlying holdings are hedged back to the Canadian dollar, removing the impact of currency fluctuations.

ZMT is a great ETF to consider if you are ok with investing in other base metal stocks as well as copper.

6. iShares MSCI Global Metals & Mining Producers ETF

iShares offers another metals ETF, this time listed on the CBOE BZX exchange in the US. PICK tracks global diversified metal stocks involved in mining, extraction, or production. It excludes precious metals like gold and silver.

The PICK ETF is also passively managed and aims to replicate the performance of the MSCI ACWI Select Metals & Mining Producers Ex Gold & Silver Investable Market Index.

PICK is a large ETF by assets and has a long performance track record. Since it trades on a US exchange, it will have to be purchased on the US side of your accounts here in Canada, using US dollars.

With over 250 underlying holdings, PICK is one of the most well-diversified ETFs on our list across different individual holdings.

The ETF has a sizable allocation to copper stocks but also invests in other metal companies. This can help to reduce risk by spreading your investment across multiple commodities.

If you are looking for a global, well-diversified ETF with exposure to other metals as well as copper, PICK is a great choice to consider.

Are Copper ETFs Worth the Fees?

When it comes to adding investment exposure to copper, using an ETF is one of the easiest ways.

If you are looking to invest a significant amount of money into copper, the storage costs of physical copper can be enormous. When it comes to buying and selling copper futures, they can be highly risky because of the high inherent volatility. 

Copper ETFs are an excellent approach (unless you are a seasoned futures trader) to getting copper price exposure. Since copper ETF fees are fairly average, the ETFs are worth the costs if you need direct exposure to the commodity.

An alternative to investing in copper ETFs for simple exposure to the commodity is to directly buy stocks of copper companies.

Strategies to Add Copper ETFs to your Portfolio

Copper ETFs should probably not make up a significant portion of your portfolio, given that the commodity is speculative in nature. Instead of hoping that the future price of copper will rise, it is likely a better idea overall to invest in profitable companies with good future growth prospects.

If you insist on investing in copper, it should likely be a very small portion of your overall portfolio. The main benefit of having a small allocation to copper in a portfolio with no commodities is the additional diversification.

Due to copper’s volatility, it can be thought of as a high-risk investment. Make sure that your risk profile matches before investing in copper (or similar commodities).

What is the Best ETF for Copper?

One of the best copper-exclusive ETFs is the Global X Copper Miners ETF (COPX), as it is globally diversified across copper mining stocks. COPX is listed in the US and will have to be purchased in US dollars.

What is the Largest Copper ETF?

The largest copper ETF by assets under management is currently the Global X Copper Miners ETF (COPX). This ETF is listed in the US.

Does Vanguard have a Copper ETF?

Vanguard does not currently offer a copper ETF. It does offer investors a materials ETF, which will likely have some exposure to copper-related stocks.

Is Copper a Good Investment in 2024?

Broader markets are currently facing significant volatility, and stocks have dropped almost across the board. This has been happening at the same time as most countries around the world become concerned with inflation.

Below are some of the main reasons for using copper:

A rebound in markets and investor sentiment, combined with an inflationary environment, should be very favourable for copper prices. 

How to Buy the Best Copper ETFs in Canada

The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:

To learn more, check out my full breakdown of the best trading platforms in Canada.

Conclusion

If you must invest in copper, Copper ETFs are a good approach to add exposure to the metal within your portfolio.

Thoroughly look at what a copper ETF invests in, especially if you are looking at a broader base metal ETF.

If you are looking for broader commodity ideas outside of copper, make sure to check out the best commodity ETFs in Canada.