With copper demand set to grow over the next decade, investors may want to tailor their exposure globally. Sprott has a pair of copper mining funds that allow for this global diversification, leveraging the country-specific spheres of influence surrounding copper.
The latest volatility-inducing tariffs stifled copper’s rally, but only momentarily. Copper’s prices have largely been trending higher for much of the year, gaining over 20% YTD.
Copper's Sphere of Influence
When considering global exposure and attaining diversification, investors will want to consider the largest global producers of copper. Moreover, Mining.com introduced an infographic below that specifically outlines the industrial metal’s sphere of influence.
One notable aspect is how increased demand and dwindling supply will affect the power dynamics of copper moving forward. International Banker noted “the massive diffusion of copper inventories to the United States means that much of the rest of the world, including top consumer China, which represents around half of the world’s total demand for the metal, will be left with insufficient stocks.”
World Relying More Heavily on Electricity
From a macro perspective, there’s no denying the importance of copper as the world becomes more heavily reliant on electricity. Additionally, the demand for electrical energy to power a world that runs mainly on computerized technology will put an emphasis on copper mining.
2 Copper Options to Consider
Given the global power sphere affecting copper miners, investors might be looking to get exposure to funds that offer this level of diversification. Sprott has a pair of funds in the +Sprott Copper Miners ETF+ (COPP ) and the Sprott Junior Copper Miners ETF (COPJ ).
The former’s top four country breakdown as of March 31 comprises Canada, United States, Australia, and Chile. The latter reveals exposure to small to midcap copper miners domiciled in mainly Canada, Australia, the U.S., and the U.K.
Each fund adds further diversification by catering to a specific market cap size. COPP specifically tracks the Nasdaq Sprott Copper Miners Index (NSCOPP). That index includes producers, developers, and explorers that support the copper mining industry. For diversification, COPP provides blanket exposure by focusing on large-, mid-, and small-cap mining companies.
Tinge of Growth From Small-Caps
On the other hand, COPJ concentrates on small and microcap companies, while also rounding out exposure with midcaps. Small-cap and microcap companies can offer investors higher potential for growth albeit greater volatility. Midcap companies can offset that exposure by offering a mix of large-cap characteristics with a tinge of growth from small-cap equities. COPJ aims to track the total return performance of the Nasdaq Sprott Junior Copper Miners Index. This index aims to track the performance of mid-, small-, and micro-cap companies in copper mining-related businesses.
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An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below.
Past performance is no guarantee of future results. One cannot invest directly in an index.
Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.
Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi.
Exchange Traded Funds (ETFs): GBUG, SLVR, SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM and SGDJ
