As traders we are attracted to volatility which is likely to be expected, and as market observers a quiet picture quickly turned unbelievably volatile in the short term always catches our attention.
Such is the case in the past seventy-two hours in the Copper futures market, where in ETF land we can reference JJC (iPath Bloomberg Copper Subindex ETN, Expense Ratio 0.75%) the largest product in a somewhat small space ($54 million in AUM). JJC has been around since 2007 so one might expect a higher asset base in the fund given its tenure, but such is not the case at the moment in spite of huge intraday volatility and trading opportunities abound in the Copper futures market here in late March.
JJC averages about 35,000 shares traded daily and has seen extremely flat asset flows year to date, but anyone would be taken aback at the more than 10% move in Copper futures prices (visible via JJC) between last Thursday and yesterday (JJC traded ultimately as high as $34.83 on an intraday basis before retreating back to the mid $33’s today).
Yesterday’s touch of $34.83 marks the highest level we have seen JJC trade at since mid-December of last year, but it did retreat rather sharply from these levels perhaps indicating a short term overbought situation.
Trading volume in JJC is slightly elevated, but we would expect more action not only in this fund being the largest in the space, but also the two other alternatives in Copper CUPM (iPath Pure Beta Copper ETN, Expense Ratio 0.75%) and CPER (U.S. Copper Index ETF, Expense Ratio 0.65%.
However, CUPM and CPER have irregular, and low trading volume even in times of huge volatility in the underlying like now typically, and the asset sizes of both of these funds remains in the “undiscovered” or “seed capital” realms at $1.4 and $1.8 million respectively.
Despite the apparent lack of ETF/ETN investor appetite for Copper futures based products at the moment, if the recent volatility proves long-lasting, it would not at all be surprising to see not only growth in these aforementioned products but perhaps new innovation in the space in the way of leveraged/inverse Copper futures ETPs.
iPath Bloomberg Copper Subindex Total Return ETN
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