When it comes to investing in metals, it’s no secret that gold and other precious metals get the most attention from investors.
And with several high-quality Exchange-Traded Funds (ETFs) providing investors exposure to different commodities like gold and silver, investors flock in droves to these securities as a hedge against inflation during volatile market conditions.
Of course, that doesn’t mean that you should forget about other metal ETFs.
Copper is another important metal that you should consider investing in to diversify your portfolio. The diverse metal is used in everything from electronics to industrial machinery, transportation, and power generation.
The highly sought-after metal might not be as precious as gold or silver. Still, it is an extremely valuable commodity that you should consider gaining exposure to in your portfolio.
If you are looking to capitalize on the booming copper industry, this post will provide you with a list of some of the best securities related to copper, including the best copper ETF in Canada that you can invest in right now.
What Are Copper ETFs?
ETFs are funds created by investment firms that pool investor funds and invest them in a basket of securities to provide investors with exposure to diversified securities.
Copper ETFs in Canada invest in a group of publicly traded companies and other securities with significant exposure to the physical metal or with mining activities involved with copper.
When you buy a copper ETF, you are paying the ETF provider to invest your capital in a portfolio of different copper-related securities on your behalf.
You get access to returns from the price changes of the valuable metal without having to worry about researching and picking individual stocks and other securities that provide you with returns based on the commodity’s performance.
Minus the management expenses for managing the fund, you get to enjoy the returns from your investment in the precious metal based on how it is performing, allowing you to get hands-off exposure to copper in your portfolio.
Unfortunately, there aren’t any ETFs listed on Canadian stock exchanges that focus on a basket of securities in the copper industry.
Note that the securities listed below include US ETFs since there aren’t any copper ETFs traded on the TSX. I have mentioned copper stocks that you could consider investing in to gain exposure to the valuable metal.
The companies I have listed include stocks that trade on Canada- and US-based stock exchanges and have significant operations involving copper, including other metals.
Some key facts about United States Copper Index Fund as of 17 September 2021:
- Ticker: NYSE:CPER
- Inception date: November 14, 2011
- Assets Under Management: US$274.27 billion
- Management Fee: 0.65%
The United States Copper Index Fund seeks to track the performance of the SummerHaven Copper Index Total Return. The underlying index is designed to reflect the performance of the investment returns from a portfolio of copper futures contracts on the COMEX exchange.
The portfolio held by the fund consists of listed copper futures contracts and other copper-related futures.
The investments held by the fund will be collateralized by cash, cash equivalents, and US government obligations with remaining maturities of two years or less. With a total expense ratio of 1.08%, it is a relatively pricey fund to buy and hold, and it is not available on Canadian exchanges.
Some key facts about iPath Series B Bloomberg Copper Subindex Total Return ETN as of 17 September 2021:
- Ticker: NYSE:JJC
- Inception date: January 17, 2018
- Assets Under Management: US$76.8 million
- Expense Ratio: 0.45%
iPath Series B Bloomberg Copper Subindex Total Return ETN is technically not an ETF, but it has some similarities to ETFs. The Exchange-Traded Note (ETN) invests in copper futures, and it is designed to provide you with exposure to the Bloomberg Copper Subindex Total Return.
The index reflects the returns that are potentially available through an unleveraged investment in the futures contracts on copper. It tracks an index consisting of a single copper futures contract at a time.
Some key facts about Global X Copper Miners ETF as of 17 September, 2021:
- Ticker: NYSE:COPX
- Inception date: March 19, 2010
- Assets Under Management: US$974.09 million
- Total Expense Ratio: 0.65%
Global X Copper Miners ETF is a fund that seeks to track the performance of the Solactive Global Copper Miners Total Return Index, providing you with exposure to a broad range of copper mining companies. It is a targeted play in copper mining companies with geographically diversified exposure to copper mining companies.
The fund has around 30 holdings, with most of its resources allocated to Canada-based copper mining companies, accounting for 37% of its allocation. It allocates 10% of its resources to companies based in China and 9.2% of it to US-based copper mining companies.
Some key facts about Capstone Mining Corp., as of September 20, 2021:
- Ticker: TSX:CS
- Market Capitalization: $2.05 billion
Capstone Mining Corp. is a base metals-focused mining company with two copper mines. One in the Pinto Valley in the US and the other in Cozamin in Mexico. The company also owns 70% of the copper-iron Santa Domingo development project in Chile in partnership with Korea Resources.
The company’s guidance for 2021 estimates that it expects to produce between 175 million and 190 million pounds of copper this year. At writing, the stock is trading for $4.98 per share, and it is up by 97.62% year to date.
Some key facts about Solaris Resources Inc. as of September 20, 2021:
- Ticker: TSX:SLS
- Market Capitalization: $1.42 billion
Solaris Resources Inc. is another Canadian mining company that has a portfolio of copper and gold projects based in Latin America. Its operations are diversified across several countries in the region, including Chile, Ecuador, Mexico, and Peru.
Its copper-gold project at Warintza in Ecuador has provided it with steady cash flows throughout 2021. At writing, the stock is trading for $13.15 per share, and it is up by 113.82% year to date.
Some key facts about Copper Mountain Mining Corp., as of September 20, 2021:
- Ticker: TSX:CMMC
- Market Capitalization: $635.17 million
Copper Mountain Mining’s primary asset is the Copper Mountain mine located in British Columbia, producing 100 million pounds of copper each year.
The company’s mining operations exceeded its guidance for copper production in 2020 while meeting its cost guidance, allowing it to enjoy significant profit margins amid the rising copper demand.
At writing, the stock is trading for $3.03 per share, and it is up by 62.03% year to date.
Some key facts about China Gold International Resources Corporation Ltd., as of September 20, 2021:
- Ticker: TSX:CGG
- Market Capitalization: $1.52 billion
China Gold International Resources Corporation Ltd. operates the CSH gold mine in Inner Mongolia and the Jiama copper-poly-metallic mine in Tibet. The company focuses on producing gold and various base metals, with copper as a primary commodity that it mines.
Its total copper production increased by 37% between the first quarter of fiscal 2020 and 2021 due to the surge in copper demand.
The company also enjoys more significant margins due to rising gold prices, and its gold production rose by 3% in the same period. At writing, the stock is trading for $3.84 per share, and it is up by 102.11% year to date.
Some key facts about Entree Resources Ltd., as of September 20, 2021:
- Ticker: TSX:ETG
- Market Capitalization: $158.84 million
Entree Resources Ltd. is a Canada-based company that has a carried joint venture interest in the Oyu Tolgoi project in Mongolia, one of the world’s most significant copper-gold projects. The company’s primary shareholders include Sandstorm Gold, Rio Tinto, and Turquoise Hill Resources.
At writing, the stock is trading for $0.84 per share, and it is up by 47.37% year to date.
Some key facts about Lundin Mining Corp., as of September 20, 2021:
- Ticker: TSE:LUN
- Market Capitalization: $6.65 billion
Lundin Mining Corp. is a precious metal mining company based in Canada with significant exposure to copper. More than 70% of the company’s production profile comprises copper.
The company also mines other industrial metals like nickel, which makes up 10% of its production profile. Besides nickel, Lundin Mining also offers you exposure to metals like gold, zinc, and lead.
Since the company’s copper mining operations focus on copper, its performance on the stock market heavily relies on changing copper prices. At writing, the stock is trading for $9.03 per share.
Some key facts about Ero Copper Corp., as of September 20, 2021:
- Ticker: TSE:ERO
- Market Capitalization: $2.20 billion
Ero Copper Corp. is another Canadian copper producer that relies heavily on the versatile red metal, but it also has exposure to gold.
The company’s production profile is primarily based in Brazil, operating in the South American country for over four decades. Its core mine is the MCSA Mining Complex based in Bahia State, but it has a project under development in Para State.
Rising gold and copper prices have been benefiting the company in recent months. At writing, the stock is trading for $24.90 per share, and it is up by 17.56% year to date.
The resurgence in demand for copper, particularly in the industrial sector, has led to a massive surge in its value. There are various ways to invest in copper. Some methods to invest in the metal are more direct than others.
The two most common ways to invest in copper are to purchase copper bullion to buy and store the physical metal in the form of bars, coins, or rounds or to purchase securities related to the metal.
Investing in copper in physical form comes with challenges for storage, and it is not as liquid as the other option: copper-related publicly traded securities. When you purchase copper stocks or copper ETFs, you are investing in companies with significant business operations involving the red metal.
The performance and returns of these publicly traded securities depend on the price of the underlying commodity. Your return on investment will be indirectly based on the performance of copper and how the securities you invest in perform based on copper.
Investing in copper-related securities gives you far more liquidity while getting exposure to the valuable metal without you having to worry about storage and selling it quickly to capture profits.
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As the surge in demand for copper continues, the versatile diverse metal will continue to be crucial for most sectors of the Canadian economy. Funds and publicly traded companies that rely on copper for their performance will likely become more valuable and offer a more substantial return on investment.
If you want this commodity to become a part of your portfolio, you might want to consider buying shares of copper stocks or the best copper ETFs in Canada.
And if you are interested in hedging your bets on a more precious commodity like gold, you could consider checking out my list of the best gold ETFs in Canada to invest in the rare yellow metal.