🔋COPX: Your Gateway to the Copper Super-Cycle That's Powering Tomorrow

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Welcome back, ETF UNO readers! Today, we're taking a closer look at a compelling investment opportunity in the commodity market: the Global X Copper Miners ETF $COPX ( ▼ 1.25% ) . While we have discussed various precious metals in previous issues, copper deserves special attention as it plays a crucial role in our electrified future. Let's explore why this metal—and the ETF that tracks its miners—could be a valuable addition to your portfolio.

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What is COPX?

You might wonder if we've covered enough metal ETFs, but copper has a unique role in the global economy. Unlike gold or silver, which are mainly stores of value, copper is a critical industrial metal. Global demand for copper is expected to rise from 34.5 million tonnes in 2024 to potentially 80 million tonnes by 2050, driven by energy transition and electrification trends.

BHP, a major mining company, projects a 70% increase in copper demand by 2050, exceeding 50 million tonnes annually. This increase isn't just due to electric vehicles; it also includes renewable energy infrastructure, data centers for artificial intelligence, and the electrification of various sectors.

Before investing in COPX, it's crucial to understand the difference between investing in copper as a commodity and in the companies that mine it:

• ⚠️Commodity ETFs provide direct exposure to copper prices through futures contracts or physical holdings. In contrast, mining company ETFs like COPX have different risk-return profiles.

• 🚀Copper mining ETFs are leveraged investments, leading to significant volatility. When copper prices rise, mining companies experience increased revenues and profit margins, as many costs are fixed. Conversely, falling prices can narrow margins and result in losses.

• 📰Copper mining ETFs are also affected by factors such as operational efficiency, management quality, geopolitical risks, and specific company events, introducing additional opportunities and risks not found in direct commodity investments.

COPX tracks the Solactive Global Copper Miners Total Return Index, provided by Solactive, a Germany-based index provider established in 2007. Solactive specialises in customised index solutions for ETFs and collaborates with top investment banks and asset managers.

Investment Strategy📊

Integrating COPX into your ETF portfolio requires careful consideration of its role and the appropriate allocation size. Given its specialised nature and inherent volatility, COPX typically works best as a satellite holding rather than a core position.

• 🌱Thematic Allocation Approach: Consider COPX as part of a broader "electrification and energy transition" theme alongside renewable energy ETFs, electric vehicle ETFs, and clean technology funds. A 3-7% allocation to this theme, with COPX representing 20-40% of that allocation, can provide meaningful exposure without overwhelming your portfolio.

• 🔄Cyclical Timing Considerations: The copper market is notoriously cyclical, influenced by global economic growth, infrastructure spending, and supply-demand imbalances. COPX may be a suitable tactical allocation during periods of economic expansion.

• 🌍Geographic Diversification: COPX offers global exposure to copper miners, including major players such as Freeport-McMoRan, BHP Group, Glencore, Southern Copper, and First Quantum Minerals. This international diversification helps mitigate single-country mining risks while capitalising on the global copper opportunity.

• ⚖️Rebalancing Strategy: Given the inherent volatility in commodity-related investments, consider implementing disciplined rebalancing bands—perhaps rebalancing when COPX deviates by more than 25-30% from its target allocation.

COPX at a glance

ETF Issuer: Global X

Inception: 2010-04-19

Asset Class: Equity

Underlying Index: Solactive Global Copper Miners Total Return Index

Geographical Focus: Global

Expense Ratio: 0.65% (as of last data point)

Dividend Yield: 1.74% (as of last data point)

Distribution Frequency: Semi-Annual

Historical Performance

As of July 2025, COPX exhibits significant volatility, typical of commodity-focused ETFs, highlighting both the opportunities and risks associated with copper mining investments.

COPX features 40 holdings and over 45 million shares outstanding, providing diversified exposure to the global copper mining sector. Its performance reflects the typical boom-and-bust cycles of commodity markets, with strong returns during periods of economic optimism and infrastructure investment but notable declines during times of financial uncertainty and supply chain issues. The fund has experienced significant volatility due to fluctuations in the copper price and company-specific factors related to the mining industry.

ETF Radar View

The radar chart below shows the general characteristics of the ETF:

Top 3 Reasons to Invest

1. The Electrification Megatrend Is Just Beginning: The energy transition is driving a long-term increase in copper demand. Electric vehicles use three to four times more copper than traditional cars, and renewable energy infrastructure, especially offshore wind projects, requires over nine tonnes of copper per megawatt. This shift fundamentally changes how we generate, transmit, and consume energy.

2. Supply Constraints Create a Powerful Setup: The copper industry faces a significant challenge, as mine supply growth is expected to peak around 2030 and decline thereafter due to worsening asset quality and a shortage of discoveries. S&P Global reported only four major copper discoveries from 2019 to 2023, totalling just 4.2 million tonnes, while the average time from discovery to production has extended to 17 years. This anticipated supply crunch, alongside rising demand, presents a considerable long-term opportunity.

3. Diversification Beyond Traditional Tech Exposure: For investors heavily weighted toward technology stocks, COPX offers exposure to the "picks and shovels" of the digital economy. Data centres for artificial intelligence applications are becoming increasingly copper-intensive, providing a new demand driver beyond traditional applications. This creates an interesting way to play the AI boom from a different angle.

Top 3 Reasons Not to Invest

1. Extreme Volatility Can Test Your Resolve: The copper market experienced extreme volatility in 2024. Daily trading volumes scaled $100 billion in a single 24-hour period, reflecting the speculative nature of these markets. This volatility can be emotionally challenging for investors and may not be suitable for all risk tolerances.

2. Geopolitical and Operational Risks: Mining operations face numerous risks beyond commodity prices, including regulatory changes, environmental concerns, labour disputes, and political instability in resource-rich countries. Many major copper-producing countries are prone to resource nationalism and political risks, adding layers of complexity that are not present in broader market investments.

3. Economic Sensitivity Creates Boom-Bust Cycles: Copper is highly sensitive to global economic growth, making COPX vulnerable during recessions or economic slowdowns. Key risks for 2025 include potential US economic recession and increased trade protectionism, which could significantly impact demand and prices.

Mining the Future of the Energy Transition⚡

The Global X Copper Miners ETF represents a compelling way to participate in one of the most significant industrial transformations of our time. With copper demand driven by unstoppable megatrends such as electrification, renewable energy, and digitalisation, combined with concerning supply constraints, the fundamental case for copper remains robust.

However, COPX isn't for the faint of heart. The volatility, cyclical nature, and various operational risks require careful position sizing and a long-term perspective. For investors willing to embrace these challenges, COPX provides exposure to a critical commodity that powers our modern world and facilitates the transition to a sustainable future.

Are you interested in exploring ETF investing further? Join the ETF UNO community for valuable insights, analysis, and investment ideas that can assist you in navigating the ever-evolving world of ETFs. In our next issue, we will delve into emerging opportunities in the fixed-income sector—be sure not to miss it!

DISCLAIMER: This article is for informational purposes only and should not be considered as investment advice. Always conduct your own research and consult with a financial advisor before making investment decisions.