Copper ETF

Right now the only instrument that directly tracks the price of copper is the futures based iPath DJ-UBS Copper ETN – JJC. This contract has good liquidity trading about the same daily volume as COPX.   JJC seeks to replicate the performance of the Dow Jones-UBS Copper Total Return Sub-Index minus fees and expenses.  This is accomplished by investing in copper futures on an non-leveraged basis using short term treasury securities as collateral.

The annual expense ratio for JJC is .75% (75 basis points) and the ETN has been trading since October 23, 2007 so it has been through a series of volatile ups and downs in it’s short existence.

As you can see from the weekly chart below it followed the same volatile path as physical copper through the boom, bust and rebirth of copper prices the past 3 years.

Comparing JJC to the leading copper stock ETF COPX you can see that since COPX started trading it underperformed while copper was weak but outperformed during the fall rally.  This is typically how the relationship should work as copper stocks earnings are more heavily leveraged to the price of copper.

Both charts are through 1/18/2011

Two new Copper ETFs debuted in 2010 and both of them focus on copper mining stocks.  GlobalX Copper Miners – COPX is by far the most actively traded of the two.  The purpose of the fund is to track the performance of the Solactive Global Copper Miners index, before fees & expenses.  The first trading date was April 20, 2010 and the mandate is for at least 80% of assets to be invested in securities and depositary receipts that make up the underlying index.

COPX recently had an expense ratio of .65%, average daily trading volume of 180k shares and approximately $45 million in assets.

Daily Chart from inception to 12/27/2010

The second Copper ETF that focuses on mining companies that also started trading in 2010 is the First Trust ISE Global Copper Index ETF – CU.  As us the case with COPX this fund also invests in global copper mining stocks.  It’s goal is to replicate the performance of the ISE Global Copper Index (before fees and expenses) with at least 90% of it’s assets invested in companies that make up the underlying index.

Recently CU had an expense ratio of .70% and an average daily volume that was about 1/3 as much as COPX.

ETF Performance comparison between COPX (black bars) and CU (brown line):

Daily chart starts on CU inception date through 12/27/2010.

Despite the fact that these two ETFs track different copper stock indices you can see the performance of these two Copper ETFs is almost identical over the period of time that they have both been trading.