Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some copper stocks to your portfolio, the Global X Copper Miners ETF (NYSEMKT:COPX) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.
ETFs often sport lower expense ratios than their mutual fund cousins. The Global X ETF's expense ratio -- its annual fee -- is 0.65%. The fund is very small, too, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.
This ETF is too young to have a sufficient track record to assess. It did lose to the world market over the past year, but as with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
Copper is both valuable and of much practical use -- necessary in new home construction, for example. As our global economy starts picking up and manufacturing and construction heat up, demand for copper should grow.
More than a handful of copper-related companies had strong performances over the past year. Southern Copper (NYSE:SCCO) gained 30%, though its long-term debt has also been soaring. Meanwhile, revenue has inched down recently, as have earnings. Still, some like the company's investments in growth and plans to boost production significantly.
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Turquoise Hill Resources (NYSE:TRQ), majority-owned by U.K.-based mining giant Rio Tinto (NYSE:RIO), sank 62%, in part due to rising mine costs. It focuses primarily on mineral mining in central Asia and Australia, and its Oyu Tolgoi mine in Mongolia is set to become one of the world's largest copper producers, though government intervention is a concern there. The $7 billion company used to be known as Ivanhoe Mines.
Taseko Mines (NYSEMKT:TGB) shed 16%, posting 2012 numbers that were generally considerably lower than 2011 results. Management noted that "2012 was a year of major transformation for Taseko... we advanced our business plan of investing in our mining operations and development assets within defined economic constraints." It has high hopes for its Gibraltar mine, which it sees as "positioned to be a significant cash flow generator thereby supporting the next phase of our growth strategy." In addition, "Gibraltar, when it achieves its full operating potential, will be one of the largest open pit copper mines in North America and notably, one of the largest reserve bases." Growth in demand for steel, meanwhile, would boost Taseko's molybdenum business.
Another copper company to consider is Rio Tinto (NYSE:RIO) itself, which has significant potential. It's well diversified beyond copper, producing aluminum, diamonds, coal, gold, and more -- with particularly strong performances from iron ore recently. The company recently hiked its dividend by 18%, too.
The big picture
Long-term, demand for copper isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.