ETF NEWS - ULTUMUS

Horizons Copper ETF

Written by Bernie Thurston | 20 May 2022

Horizons copper ETF

Mirae subsidiary Horizons ETF is launching Canada’s first copper ETF, building a fund that looks very similar to the US-listed Global X Copper Miners ETF (COPX).

 

The Horizons Copper Producers Index ETF (COPP) has been listed on the TSX, Canada’s main exchange. It tracks the Solactive North American Listed Copper Producers Index.


The index is made of global copper miners with listings on US and Canadian exchanges. 

 

The index uses FactSet’s RBICS sector system to identify US and Canadian-listed copper miners. Miners are classified as either pureplay or diversified. Pureplays make most of their revenue from copper, whereas diversified make a substantial portion but less than a majority.

 

It’s important to note here that it is companies with any US or Canadian listing – not headquarters. Thus the Anglo-Australian mining companies Bhp and Rio Tinto are in the index.

 

The index is market weighted, however pureplay companies have their weights capped at 10%, whereas diversified have their weights capped at 5%.

 

The fund charges 0.65%.

 

Bernie’s commentary – will probably work

Overall, I think this is a solid and unpretentious listing.

 

Copper mining has an extremely straightforward investment thesis. Copper is used extensively in electric vehicles, which are booming. It is also the crucial element helping Asian countries like India develop. India has now brought electricity to every town under Modi thanks to vast investment in copper wiring. This has meant the copper price is soaring, supporting copper miners.

 

Copper miners are also extremely straightforward to identify. Mining companies publish what percentage of their revenue they derive from copper in their annual and quarterly reports. So it’s easy to know whose winning from a higher copper price.

 

Copper mining ETFs have seen success overseas. Global X – also owned by Mirae – has $1.7 billion in COPX. (This fund has opted for a very slightly different index to COPX. I am unsure why.)

 

Canadians – like Australians – also know a lot about mining companies. So this ETF will probably mesh well with Canadian retail investors.

 

So in sum, you have a proven concept built around a rock solid investment case. It’s a good ETF.