Copper prices are hovering around this year’s low as a stronger dollar, weaker global demand outlook and the flight to safety weigh on the industrial metal. Copper investors, though, may at least enjoy the lower cost of holding the United States Commodity Fund copper exchange traded fund.
The United States Copper ETF (NYSEArca: CPER) now has a 0.65% expense ratio, reduced from 0.95%, according to a press release.
CPER tries to reflect the price movements of the SummerHaven Copper Index Total Return, which follows coppers futures contracts.
“With CPER, we tried to design both a useful tool for investing in copper exposure over the long term, as well as a useful tool for trading copper exposure over the sorter term,” Chief Investment Officer John Hyland said in the press release. “We think that offering it with lower expenses will help generate economies of scale for both trading and investing.”
Cutting an ETF’s expense ratio is becoming a growing trend within the industry. Recently, BlackRock‘s iShares, Vanguard and State StreeT Global Advisors have all reduced expense ratios on some of their products in what was perceived as an escalation to a growing price war. However, the companies have attributed to reductions as a response to economies of scale, as well. [ETF Price Wars: Round 2]
Currently, there are no physically-backed copper ETFs. Other futures-based funds include iPath Pure Beta Copper ETN (NYSEArca: CUPM) and the iPath Dow Jones UBS-Copper Total Return ETN (NYSEArca: JJC). Although, JPMorgan is working on the first physically-backed copper fund. [JP Morgan Readies First Physical Copper ETF]
United States Copper ETF
For more information on the copper market, visit our copper category.
Max Chen contributed to this article.