Industrials metals prices have taken off as Western sanctions against Russia over its invasion of Ukraine sparked concerns over the metal supply. Russia produces about 7% of the world's nickel, 6% of the global mined aluminium, about 3.5% of the world's copper supply, and a small portion of the world's zinc output (~2.2%). The disruptions of trade flows as the result of the sanctions have sent futures through the roof. The Bloomberg Industrial Metals Subindex (BCOMIN), which is composed of futures contracts on aluminium, copper, nickel and zinc jumped by +51% since the war broke out in Ukraine on February 24th, 2022, and +32% over the past couple of days.
Investing in US-based Industrial Metals Commodities ETFs
Investors hoping to capitalize on a long-lived run of industrial and base metals can jump on board via industrial metals Exchange-traded funds (ETFs). The Invesco DB Base Metals Fund (DBB) seeks to track DBIQ Optimum Yield Industrial Metals Index Excess Return and provides to futures some of the most liquid and widely used base metals — aluminium, zinc and copper (grade A). DBB has a total expense ratio of 0.77% and trades primarily on the NYSE Arca.
By tracking the Bloomberg Industrial Metals Subindex, the Aberdeen Bloomberg Industrial Metals Strategy K-1 Free ETF (BCIM) provides exposure to copper, aluminium, zinc and nickel futures with a maturity between 1 and 3 months. BCIM has a total expense ratio of 0.47% and trades primarily on the NYSE Arca.
On the other hand, the United States Copper Index Fund (CPER) seeks to track the SummerHaven Copper Index Total Return and provides exposure to a portfolio of copper futures contracts trading on the COMEX exchange. CPER has a total expense ratio of 1.08% and trades primarily on the NYSE Arca.
Since February 24th, DBB, BCIM and CPER gained +12.2%, +31% and +6.6% respectively.
Investing in Europe-based Industrial Metals Commodities ETFs
European investors can equally gain exposure to the different base metals through Europe-domiciled ETFs. WisdomTree offers a diverse range of products with exposure to single base metal futures such as the WisdomTree Copper (COPA), WisdomTree Nickel (NICK), WisdomTree Aluminum (ALUM), and WisdomTree Zinc (ZINC); and a basket of industrial metals futures such as WisdomTree Industrials Metals (AIGI), WisdomTree Industrial Metals Enhanced (EIMT), and WisdomTree Industrial Metals Longer Dated (FIND). Investors who would like to place a bigger on the rise or fall of industrial metals futures can do so through leveraged or leverage short WisdomTree ETCs such as WisdomTree Copper 3x Daily Short (3HCS) or WisdomTree Nickel 3x Daily Leveraged (3NL) — to name a few. These ETCs trade on multiple European Exchanges.
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