China is grabbing any and all natural resources, especially copper, and platinum’s prices are soaring these days. To capture the momentum, First Trust has launched the industry’s first equity-based platinum and copper exchange traded funds (ETFs).
Until now, copper exposure was available in an exchange traded note (ETN) via iPath Dow Jones UBS Copper (NYSEArca: JJC) or as a component of the PowerShares DB Base Metals (NYSEArca: DBB), which is 40% copper futures. [Why Metals ETFs Are Leading the Charge.]
Platinum exposure is available through the popular ETFS Physical Platinum (NYSEArca: PPLT), as well as through ETNs such as UBS E-TRACS Long Platinum (NYSEArca: PTM), UBS E-TRACS Short Platinum (NYSEArca: PTD) and iPath DJ-UBS Platinum (NYSEArca: PGM).
Mark Abssy, index and ETF manager at ISE, says the indexes behind the copper and platinum funds were developed in 2008 as investor interest in the ISE and First Trust natural gas ETF, First Trust ISE-Revere Natural Gas (NYSEArca: FCG) was gaining momentum. Commodities were also becoming a part of more and more headlines, leading ISE to think about other commodities that might be of interest to investors. “We were thinking along those lines – what can we help investors get exposure to?” Abssy says. “The first two we came up with were platinum and copper.” [Platinum and Palladium Price Drivers.]
The market cap minimum of $75 million is admittedly low. The reason, Abssy says, is that when considering mining stocks, there are a number of companies still in the exploration stage, but have yield estimates based on geological surveys. “Much of their valuation is tied to the value of the commodity,” he says. Those companies tend to be more sensitive to underlying commodity price action, offering more direct exposure to the underlying commodity than fully functioning mines. [Your Guide to Investing In Metals ETFs.]