Global X has introduced its first commodities-focused ETF in Europe with the launch of the Global X Copper Miners UCITS ETF.
Morgane Delledonne, Director of Research, Europe, at Global X.
Listed on the London Stock Exchange in USD (COPX LN) and GBP (COPG LN) and on Deutsche Börse Xetra in EUR (4COP GY), the fund provides exposure to a diversified basket of copper mining companies around the world.
Global X offers a similar ETF in the US, the Global X Copper Miners ETF (COPX US), which houses more than $900m in assets.
Copper is seen as a leading barometer of the health of the world’s economy.
In March 2020, the metal hit a five-year low, trading at a little over $4600/tonne, as Covid-19 brought global growth to a standstill. But with the reopening of the global economy well underway, Copper prices have rebounded and are presently trading around the $9900/tonne mark.
Recent figures out of China indicate that the country’s demand for refined copper has surpassed pre-pandemic levels.
According to Global X, current optimism around copper stems from several factors including inflation expectations (the metal has historically been one of the best-performing assets during periods of rising prices) and structural demand drivers such as accelerating electric vehicle adoption, the shift to clean energy solutions, and major global infrastructure spending.
Morgane Delledonne, Director of Research, Europe, at Global X, said: “Copper is useful for a wide range of applications including construction, industrial machinery, transportation, electric generation, and electronics. 2021 has proven to be a transformational year for copper, and we have a strong long-term outlook for copper demand driven by trends poised to disrupt the global economy.”
Index methodology
The fund is linked to the Solactive Global Copper Miners v2 Index which selects its constituents from a universe of stocks worldwide that have market capitalizations above $200 million and average daily trading volumes greater than $500,000.
The methodology screens for firms that derive ‘a significant proportion’ of their revenue or expected future revenue from the exploration, mining, and refining of copper.
The index targets 40 constituents, selecting the companies with the highest average daily trading volumes.
Constituents are weighted by float-adjusted market capitalization subject to an individual cap of 4.5%. The index is reconstituted and rebalanced semi-annually.
As of 24 November, Canadian stocks accounted for just under a third (30.2%) of the total index weight with the next-largest country exposures being Australia (12.6%), the US (10.1%), and Japan (8.0%).
Notable positions included Oz Minerals (5.4%), Freeport-McMoRan (5.3%), Sumitomo Metal Mining (5.3%), BHP (5.1%), and Zijin Mining (5.1%).
The ETF comes with an expense ratio of 0.65%.
The fund is the only ETF in Europe to exclusively target copper mining stocks – UBS previously offered a product along these lines but the fund was shuttered due to a lack of demand.