As the global transition towards clean energy gains momentum, copper (HGH24) is expected to play a vital role. This is because the industrial metal has four key properties that make it ideal for the clean energy transition - namely, conductivity (it has the highest electrical conductivity rating among non-precious metals); ductility (it can be shaped into pipes, wires, or sheets); efficiency (its thermal efficiency is 60% greater than aluminum); and finally, recyclability (it can be reused without any loss in performance).
Moreover, copper is an essential component for multiple forms of clean energy technologies, such as solar, wind, electric vehicles (EVs), and bioenergy. Data from S&P Global Market Intelligence suggests that due to the clean energy transition, demand for copper will rise by 82% between 2021 and 2035.
However, copper prices have been under pressure recently, and the slowdown in China - the world's largest consumer of copper - is to blame. March copper futures recently hit their lowest levels since mid-November, although they've since recovered some ground.
For investors looking to add exposure to this key industrial metal, here are five exchange-traded funds (ETFs) that should benefit as demand for the red metal rises over the longer term.
ETF #1: US Copper (CPER)
US Copper (CPER) was launched in October 2012 by USCF Investments, a leading provider of commodity-focused ETFs. The investment objective of the fund is to track the price of copper futures contracts, net of the fund's expenses. Given that, its holdings consist entirely of copper futures contracts.
CPER is nearly unchanged on a YTD basis. With assets under management (AUM) of $125.1 million, the fund has an expense ratio of 0.88%.
ETF #2: GX Copper Miners ETF (COPX)
Launched on May 20, 2011, by Global X ETFs, GX Copper Miners ETF (COPX) tracks the performance of the Solactive Global Copper Miners Total Return Index, which invests in companies globally engaged in copper mining and exploration.
With AUM of roughly $1.4 billion, its expense ratio stands at 0.65%. Its top holdings consist of pure-play copper miners such as Southern Copper (SCCO), Freeport-McMoRan Inc (FCX), and Ivanhoe Mines (IVN.TO), among others.
COPX is down 2.8% on a YTD basis.
ETF #3: Sprott Junior Copper Miners ETF (COPJ)
Launched in January 2023 and managed by Sprott Asset Management, the Sprott Junior Copper Miners ETF (COPJ) tracks the performance of the Nasdaq Sprott Junior Copper Miners Index, which invests in mid-, small-, and micro-cap companies focused on copper mining, development, and exploration.
COPJ has an AUM size of $4.9 million and an expense ratio of 0.75%. Its top holdings include Compania de Minas Buenaventura (BVN), Ero Copper (ERO), Capstone Copper (CSCCF), and Hudbay Minerals (HBM).
The ETF is down 4.1% on a YTD basis.
ETF #4: iShares Copper and Metals Mining ETF (ICOP)
Managed by the world's largest asset manager, BlackRock (BLK), the iShares Copper and Metals Mining ETF (ICOP) tracks the investment results of an index composed of U.S. and non-U.S. equities of companies primarily engaged in copper and metal ore mining.
Its AUM size is currently at $4.9 million and the ETF has an expense ratio of 0.47%. Top holdings consist of Grupo Mexico S.A.B. de C.V. (GMBXF), Freeport-McMoRan, BHP Group (BHPLF), Ivanhoe Mines, and Antofagasta (ANFGF), among others.
ICOP is down 4% on a YTD basis.
ETF #5: iShares Global Select Metals & Mining Fund (PICK)
Launched on Jan. 31, 2012, the iShares Global Select Metals & Mining Fund (PICK), also managed by BlackRock, tracks the investment results of an index composed of global equities of companies primarily engaged in the mining, extraction or production of diversified metals, excluding gold and silver. As such, it is not a pure-play copper ETF, but offers more diverse exposure to the non-precious metals and mining space.
PICK is down 7.4% on a YTD basis. With an AUM of $1.1 billion, its expense ratio stands at 0.39%. The top holdings of the ETF are BHP Billiton (BHP), Rio Tinto (RIO), FCX, and Nucor (NUE), among others.
