J.P. Morgan Files For Copper ETF...Again
J.P. Morgan Commodity ETF Services, the ETF arm of Dow component J.P. Morgan Chase (NYSE: JPM), has reportedly filed plans with the Securities and Exchange Commission to list the JPM XF Physical Copper Trust, an exchange-traded product backed by physical copper holdings. The filing is dated April 2 and could result in 60,000 tons of the red metal being purchased for the fund.
The JPM XF Physical Copper Trust could list as soon as early June and could provide a boost to downtrodden copper prices. The iPath DJ-UBS Copper TR Sub-Index ETN (NYSE: JJC) slid 2.6% on Friday following China's disappointing first-quarter GDP growth of 8.1%. China is the world's largest copper consumer.
The J.P. Morgan filing for a copper ETF isn't exactly new news. In 2010, the bank along with Deutsche Bank (NYSE: DB), BlackRock's (NYSE: BLK) iShares, the world's largest ETF issuer, and ETF Securities filed plans for copper-backed ETFs.
In December 2010 following news of those filings, RBS said a copper-backd ETF could boost prices to $4.50 a pound and one analyst quoted in a Financial Times piece said a successful copper ETF could be the difference between copper priced at $8,500 per ton and $10,000 per ton. LME benchmark copper closed below $8,000 per ton on Friday.
While expense ratios for physically-backed funds such as the SPDR Gold Shares (NYES: GLD), iShares Gold Trust (NYSE: IAU) and iShares Silver Trust (NYSE: SLV) are reasonable, that might not be the case with a copper ETF. As Benzinga reported over a year ago a consideration for ETF issuers looking to enter the physical copper game is the cost of storage, which could lead to higher expense ratios for investors.
J.P. Morgan's filing said the bank will use its warehouse company Henry Bath Group to store the metal in both on- and off-warrant facilities initially in the Netherlands, Singapore, South Korea, Shanghai, China and the United States, Reuters reported.
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