Copper Soaring in 2024: Top ETPs to Maximize Returns

The Outlook for Copper in 2024

The year 2024 is shaping up to be a crucial year for copper, known for its electrical and thermal conductivity, which are essential in various industrial sectors.
With geopolitical tensions and production constraints putting global reserves to the test, demand is on the rise.
This is driven by the recovery of manufacturing in key countries such as the USA and China, as well as the urgent need for sustainable materials for the energy transition.

2024 Outlook: From Bank of America to Ofi Invest

Analysts such as those at Bank of America are projecting copper prices to potentially reach $12,000 per ton by 2026, reflecting an optimistic market outlook.
This forecast is based on increased demand for eco-friendly applications and the critical supply situation, exacerbated by political tensions and legal decisions that have slowed production in key countries like Chile and Panama.

Meanwhile, prominent figures in the commodity sector, such as Benjamin Louvet of Ofi Invest Am, suggest that 2024 could mark the beginning of an unprecedented upward trend for the red metal, with potential increases of 30% within a few years.
This scenario is supported by a combination of reduced supply factors and increasing demand, not only for renewable energy and infrastructure but also for emerging technologies like artificial intelligence, which are increasingly reliant on copper for their realization.

Analysis of WisdomTree Copper ETC

The WisdomTree Copper positions itself as a leading investment vehicle for those looking to capitalize on copper price movements in the commodities market.
Launched on September 27, 2006, this Exchange Traded Commodity (ETC) boasts managed assets of approximately EUR 1.17 billion, underlining its relevance and acceptance in the market.

The replication mechanism used by WisdomTree Copper is synthetic through a swap, allowing it to emulate the performance of the Bloomberg Copper index, which in turn tracks the price of copper futures contracts.
This replication method is particularly appreciated for its ability to reduce tracking error compared to the reference index, although it introduces a counterparty risk element that needs to be closely monitored.

The Total Expense Ratio (TER) stands at 0.49% annually, a cost level that investors should consider in relation to the ETC’s potential returns.
The volatility profile, with a 17.17% annual basis, reflects the often turbulent nature of the copper market, influenced by factors such as geopolitical dynamics, industrial demand variations, and production policies of major exporting countries.

The historical performance of WisdomTree Copper shows robust growth, with an accumulated return of +55.70% in the last five years, signaling the increasing relevance of copper in modern economies, especially in the context of energy transition and electrification.
However, annual fluctuations highlight the ETC’s sensitivity to market oscillations, with a recent decrease in 2022 of -9.68% and a significant recovery in 2021 with a +36.19% return.

Analysis of WisdomTree Industrial Metals ETC

Similarly, WisdomTree Industrial Metals offers investors the opportunity to invest in a portfolio of industrial metals, replicating the Bloomberg Industrial Metals index through a synthetic replication.
Also launched on September 27, 2006, and domiciled in Jersey, this ETC manages assets of EUR 403 million, indicating a smaller size compared to its copper-focused counterpart.

The ETC encapsulates a broader range of metals, making it ideal for investors seeking diversification within the industrial metals segment without focusing solely on a single commodity.
Here too, the Total Expense Ratio is 0.49% annually, and synthetic replication minimizes the tracking error compared to the reference index.

Despite its smaller size, WisdomTree Industrial Metals has demonstrated solid performance, with an increase of +43.04% in the last five years.
However, the ETC has shown an annual volatility of 14.83%, slightly lower than WisdomTree Copper, which may indicate less exposure to direct price shocks compared to copper alone.

In conclusion, both WisdomTree Copper and WisdomTree Industrial Metals represent valid instruments for investors seeking exposure to industrial metals.
The choice between the two will depend on specific risk preferences, diversification goals, and outlook on the specific dynamics of the industrial metals market.
Both ETCs offer a competitive cost structure and direct access to key sectors for the global economy.