ETF Trends
ETF Trends

If you’ve been dreaming of the day you can own a physically-backed aluminum exchange traded fund (ETF), your dream could be coming true.

According to Benzinga, the Russian aluminum giant United Company RUSAL, the world’s largest producer of the industrial metal, said that an ETF backed by physical aluminum could make its debut in a matter of weeks.

The timing for the fund would be good. Aluminum prices have  been rising on improving industrial activity globally. A physically-backed fund could only further fuel the fire: some speculate that an aluminum ETF could send prices as much as 24% higher, reports Alison Leung for Reuters.

According to NASDAQ, Alcoa (NYSE: AA) has been reaping the rewards of higher prices in the form of more revenue. Aluminum prices have increased over the last two years since their sudden decline from peak prices in mid-2008. The 13% increase in global aluminum prices in 2010 have sparked an interest in the metal by investors and providers alike.

While you wait for a physical offering, there are other ways to get your aluminum fix via ETFs:

  • Global X Aluminum (NYSEArca: ALUM): The only equity pure-play on aluminum, Global X’s new ETF launched toward the beginning of the year. Since then, it’s up 4%. Among the top holdings are some of the most well-known names in the industry, including Rio Tinto (NYSE: RIO) and Alcoa.
  • PowerShares DB Base Metals (NYSEArca: DBB): DBB is evenly divided between futures contracts on three industrial metals: copper, zinc and aluminum. It’s a good way to play the increasing demand for such metals, though futures-based funds don’t necessarily correlate exactly with the spot price.
  • iPath DJ-UBS Aluminum ETN (JJU): JJU is an exchange traded note (ETN) that tracks aluminum futures contracts. ETFs and ETNs are similar, but differ in some important ways. Here’s how.
Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.