New research with 150 European pension funds with a combined AUM of $213 billion, reveals that the majority believe copper will become an even more attractive investment and prices will rise during the remainder of this year. Long known for its strong relationship with global economic activity, copper is fast becoming an indispensable commodity which is oiling global growth in green energy.
The study, which was carried out by Global Palladium Fund (GPF), the provider of industrial and precious metal Exchange Traded Commodities, shows that 81% of pension funds think that rising inflation and economic growth will make copper an even more appealing metal for professional investors, with almost half (49%) looking to overweight their exposure to copper, compared to 21% who expect to be underweight over the next 12 months.
Alexander Stoyanov, Chief Executive Officer of GPF said: “Copper prices are positively correlated to inflation, and it is one of the best performing assets during inflationary periods. Strong economic growth is fuelling demand for the metal, and cleantech and renewables projects, as well as infrastructure development, represent significant growth opportunities for copper.”
When it comes to what institutional investors expect to happen to the price of copper, 17% expect it to end the year up to 3% higher than its value mid-April. Some 45% anticipate it will be between 3% and 9% higher, and 37% think it will end the year above this.
Copper’s pricing is one of the primary beneficiaries of clean energy roll-out and commitments to meet the Paris Agreement. Clean energy systems are expected to make-up around 40% of global copper demand over the next two decades (IEA 2021). It is also one of the largest beneficiaries of the American Jobs Plan and China’s One Belt One Road Initiative which are expected to consume a significant quantity of copper over the next decade.
The Global Palladium Fund (GPF), established by MMC Norilsk Nickel, the world’s largest producer of palladium and high-grade nickel and a major producer of platinum and copper, has launched six physically-backed metal ETCs this year – copper, nickel, silver, gold platinum and palladium.
The GPF copper ETC which was launched earlier this month, is the world’s only physically-backed copper ETC with an annual total expense ratio (TER) of 0.85%. The TER of 0.85% is the all-in-cost for investors, making it the most cost-effective way to gain exposure to the metal; by comparison swap based exchange traded products may charge a lower management fee but end up being more expensive due to hidden swap and licensing fees. The new ETC is listed on London Stock Exchange and Borsa Italiana.
Targeting family offices, wealth managers, institutional and other similar professional investors, the ETC will track the spot price of the metals. The metal backing GPF ETC is stored in secure warehouses in Rotterdam.
The metal backing the ETC is sourced from producers and metal suppliers which have confirmed their compliance with the Sustainable Development Goals of the UN 2030 Agenda and other global initiatives in sustainable development and responsible mining. GPF is the only major ETC issuer to make such a pledge.
To strengthen ETC investor security, GPF uses IBM’s Hyperledger Blockchain in the custody chain of the metal. This is in addition to the traditional processes used by the custodian, enhancing the transparency and accountability of the issuer. By recording bar and cathode information on the blockchain, it provides clear ownership and an immutable custody chain for investors using the ETCs.
Alexander Stoyanov said: “Copper has a fundamental role to play in enabling economic growth and the transition to green energy. Our study shows that European pensions funds are set to take advantage of this and view copper as an attractive investment. Our unique physically-backed copper ETC offers them the opportunity to access this vital commodity at extremely competitive rates.”