The iPath Dow Jones-UBS Copper Subindex Total Return ETN (NYSEArca: JJC) is up 13.4% over the past three months, which is good for industrial metals exchange traded products with exposure to the red metal.
Copper’s resurgence has also been a boon for the iShares MSCI Chile Capped ETF (NYSEArca: ECH), the lone ETF dedicated to tracking equities in the world’s largest copper-producing country.
ECH “has received $57 million in funds without a single day of outflows since April 2. In the past week, the ETF had inflows of $13 million, more than any other fund in the region, according to data compiled by Bloomberg,” reports Eduardo Thomson for the news agency.
ECH’s second-quarter inflows stand-out among the major single-country ETFs tracking Latin American nations. The Chile fund’s $57.2 million of inflows for the current quarter through May 13 trail only the $63.2 million allocated to the iShares MSCI Mexico Capped ETF (NYSEArca: EWW). [Mexico ETF is Still a Dud]
ECH’s second-quarter inflows are more than double the amount investors have allocated to the Global X FTSE Colombia 20 ETF (NYSEArca: GXG) and more than 11 times the inflows to the iShares MSCI All Peru Capped ETF (NYSEArca: EPU). Colombia and Peru are also major copper producing countries. ECH has been regaining investors’ favor while the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ), the largest Latin America ETF, is bleeding assets. EWZ has lost $97 million this quarter. [Copper Surge Boosts Chile
It is not just copper that is stoking new money into ECH.
“More than half of the past week’s inflows came on the day that Rodrigo Valdes, a former economist for Barclays PLC and BTG Pactual, was appointed finance minister to replace Alberto Arenas,” according to Bloomberg.
Markets have embraced the appointment of Valdes. ECH is up 4% over the past month, nearly double the gain of the iShares Latin American 40 ETF (NYSEArca: ILF) over the same period.
When looking at ECH, the ETF’s correlation to copper prices is not readily apparent. The ETF’s materials sector weight is just 11.5%, or 650 basis points below the fund’s weight to bank stocks and well below the almost 28.5% allocated to the utilities sector. In fact, there is just one materials stock found among ECH’s top 10 holdings. However, ECH’s five-year correlation to JJC is 0.6.
Over the past 90 day, the $296.4 million ECH is up 10.6%, or 180 basis points ahead of EWZ, the second-best performer among the largest Latin America single-country ETFs.
iShares MSCI Chile Capped ETF
