SummerHaven Index Management, the Stamford, Conn.-based index
provider behind the U.S. Commodity Funds' broad commodities ETF
(NYSEArca:USCI), is again expanding that partnership by licensing
its recently launched copper index to the fund provider.
Less than a month ago, U.S. Commodity Funds acquired licenses
for SummerHaven's metals and agriculture benchmarks, in a move the
company characterized as an effort to expand its roster of
commodities funds beyond single-commodity ETFs.
Now, the ETF company is looking at the copper market for its
next fund amid growing investor interest in the base metal that is
used in many industrial applications. J.P Morgan and iShares
recently filed with the Securities and Exchange Commission to offer
copper ETFs as well, though the two will be based on physical
holdings, not futures.
The SummerHaven Copper Index (
) is made up of Comex high-grade copper futures contracts with
maturities of 18 months or less, and maintains positions in liquid
portions of the copper futures curve, in a methodology that seeks
to maximize backwardation at the expense of contango.
"We are excited to license an index that addresses important
issues of storage, contango and backwardation in the copper market
while providing returns that are consistent with the performance of
copper prices," John Hyland, U.S. Commodity Funds chief investment
officer, said in a press release.
SCI is designed for investors who are seeking risk-adjusted
copper returns, SummerHaven said in an earlier press release.
"Physical copper storage costs have averaged more than 3 percent
per year over the last decade, and copper futures investors can at
least partially avoid these costs when the futures market is
backwardated," SummerHaven partner Kurt Nelson said in the
"Physical copper investors don't earn interest on their physical
investment, and the SCI includes full cash collateral return
through the 90-day U.S. Treasury Bill rate," Nelson added.
U.S. Commodity Funds, best known for its $1.7 billion U.S. Oil
Fund (NYSEArca:USO) and its $2.5 billion U.S. Natural Gas Fund
(NYSEArca:UNG), first partnered with SummerHaven to launch the U.S.
Commodity Index Fund in August, its first ETF not focused
exclusively on energy.
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