Nickel is becoming more of a critical element because it is used in key everyday things such as batteries and electric vehicles.
When investing in metals such as nickel, the most common approach is to use futures contracts.
For investors that don’t want to risk having to physically purchase six tonnes of nickel, ETFs are a better approach.
We’ll cover the best nickel ETFs in Canada and discuss their features below.
Best Nickel ETFs in Canada
Our list includes ETNs, as well as ETFs that have only partial exposure to nickel. These ETFs may also contain exposure to other similarly-themed metals such as lithium and cobalt. There aren’t many nickel ETFs that are specific to Canada, so I’ve included several American nickel ETFs as well.
- Ticker: XBM.TO
- Inception Date: April 12, 2011
- Assets under Management: $199.01 million
- Management Expense Ratio: 0.60%
- Listed on: Toronto Stock Exchange
- Distribution Yield: 5.05%
- Stock Price: $17.33
- YTD Return: -6.19%
XBM is a large ETF offered by Blackrock here in Canada. It passively tracks the S&P/TSX Global Base Metals Index.
The ETF invests in global stocks that are focused on the production or extraction of base metals. It is somewhat concentrated in Canadian stocks.
XBM has a very high yield, and pays distributions semi-annually.
This ETF can be purchased in Canadian dollars. XBM is not currency-hedged back to the Canadian dollar.
XBM’s MER is high for a passive global stock strategy.
Although nickel is a base metal, the ETF also covers companies working with other metals. XBM offers partial exposure to the price of nickel.
2. iPath Series B Bloomberg Nickel Subindex Total Return ETN
JJN is not an ETF, but rather it is an ETN. There are some differences between the two structures. Despite this, JJN will allow you to easily add exposure to nickel prices to your portfolio.
The ETN is listed on a US exchange, meaning that it will have to be purchased on the US side of your accounts as a Canadian investor.
JJN uses a futures-based strategy which comes with additional risks when compared to a traditional stock ETF. Commodity futures are usually considered as being higher risk than most stocks.
JJN’s MER is average, considering that it simplifies adding direct nickel exposure to your account. The ETN does not pay distributions and has fairly low assets.
An important difference between an ETN and an ETF is that the ETN does not hold underlying securities. JJN comes with default risk, which is based on its issuer’s ability to pay back investors.
The issuer for JJN is Barclays Capital. This is the only pure-play option for investing in Nickel beyond buying futures, purchasing the metal physically, or buying shares in a nickel miner.
3. VanEck Green Metals ETF
- Ticker: GMET
- Inception Date: November 9, 2021
- Assets under Management: $21.82 million
- Management Expense Ratio: 0.59%
- Listed on: New York Stock Exchange
- Distribution Yield: 2.48%
- Stock Price: $22.9725
- YTD Return: -18.9%
GMET is a small ETF offered by VanEck. It passively tracks the MVIS Global Clean-Tech Metals Index.
The ETF invests in global stocks focusing on green metals, which include nickel. This diversifies an investor’s risk across several metals, not just nickel.
GMET pays distributions annually, and it is very well-diversified geographically. The fund does not hedge its currency exposure.
The asset level of GMET may put it at risk of closing down in the future. The MER is also fairly high for a passive global stock ETF.
GMET is also listed on a US exchange, meaning it will have to be purchased on the US side of your accounts.
- Ticker: PICK
- Inception Date: January 31, 2012
- Assets under Management: $1.26 billion
- Management Expense Ratio: 0.39%
- Listed on: New York Stock Exchange
- Distribution Yield: 6.36%
- Stock Price: $40.55
- YTD Return: 0.85%
PICK is a massive ETF offered by Blackrock. It passively tracks the MSCI ACWI Select Metals & Mining Producers Ex Gold & Silver Investable Market Index.
The ETF invests in global stocks focused on mining, extraction, or production of metals (excluding silver and gold).
PICK has a high dividend yield and pays distributions semi-annually. It does not hedge its currency exposures. PICK’s MER is average for a passive global stock strategy.
With exposure to diversified metals, you will only be getting partial exposure to nickel by investing in this ETF.
5. SPDR S&P Metals & Mining ETF
- Ticker: XME
- Inception Date: June 19, 2006
- Assets under Management: $2.02 billion
- Management Expense Ratio: 0.35%
- Listed on: New York Stock Exchange
- Distribution Yield: 0.67%
- Stock Price: $53.34
- YTD Return: 8.15%
XME is another massive ETF offered by State Street Global Advisors. It passively tracks the S&P Metals and Mining Select Industry Index.
The ETF invests in US stocks focused on metals and mining.
XME has a very low dividend yield and pays distributions quarterly. XME’s MER is average for a passive US stock strategy.
Similar to PICK, you will only be getting partial exposure to nickel if investing through XME. Make sure to check out its latest holdings and fund fact sheet for exposures and weights.
How to Buy the Best Nickel ETFs in Canada
The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:
- 105 commission-free ETFs to buy and sell
- Excellent customer service
- Top-notch market research tools
- Easy-to-use and stable platform
- Stock and ETF buys and sells have $0 trading fees
- Desktop and mobile trading
- Reputable fintech company
- Fractional shares available
To learn more, check out my full breakdown of the best trading platforms in Canada.
Is there an ETF for Nickel?
From our list above, the options for investing in nickel directly through exchange-traded products are fairly limited. JJN is the only option on the list that invests entirely in nickel, but it is an ETN rather than an ETF.
Although there is no ETF entirely tracking the price of nickel, it can be accessed through JJN, the metals ETFs on our list, or through nickel futures directly.
ETFs are more useful as a way to access a diversified basket of investments through a one-ticket solution.
What is the Best Nickel Stock?
Individual nickel stocks are assessed based on different criteria than ETFs. It is usually difficult to label one particular stock as being the best.
There may be nickel stocks that are trading at an expensive valuation. This would likely be because of strong cash flows and future growth prospects.
You may also find nickel stocks that are trading at a discounted valuation. In this case, the cash flows of the company would be weaker. It may also have weaker growth prospects going forward.
It’s ideal to find a nickel stock that is the best for your personal portfolio and goals.
If you are looking for help finding great nickel stocks, check out this video:
Is Nickel a Good Investment?
Nickel is part of a broader category of metals called base metals. This group of metals currently has two positive tailwinds that make them good future investments:
- An inflationary environment is positive for base metals, including nickel prices
- Nickel and other base metals are used in electric vehicles and other green energy initiatives
It is likely that over a long-term horizon, renewable energy and electric vehicles will become more widely adopted. If this is the case, it will be positive for nickel prices from a demand perspective.
When investing, it’s important to remember to stay diversified over different asset classes to smoothen out returns. Investing your entire portfolio in nickel or base metals will lead to a lot of concentration risk.
With that said, an allocation to nickel or base metals within your portfolio is likely a great idea long-term.
It is important to stay on top of future trends when investing to grow your money over time. Although commodity and metal prices can be volatile, their demand will likely increase in the future.
Although a more unconventional way to get exposure to nickel, our list above outlines some of the best ETF/ETN vehicles available today.
Remember that nickel and base metals make up a very small portion of the overall investable universe. Make sure to thoroughly consider your goals, objectives, and risk tolerance before building your portfolio.