COPP Frequently Asked Questions (FAQs)


COPP Miners ETF Sprott Copper Miners ETF (Nasdaq: COPP)

On March 5, 2024, Sprott Asset Management announced the launch of the Sprott Copper Miners ETF (COPP), which adds to its suite of Energy Transition ETFs

Please Note: This FAQ is not wholly inclusive of all relevant information. Investors should consult the prospectus for more information, or please reach out to your Sprott representative at 888.622.1813 or energytransition@sprott.com for additional questions.

1

How can I invest in the Sprott Copper Miners ETF?

The Sprott Copper Miners ETF is listed on Nasdaq® under the symbol “COPP.” Investors can purchase COPP in a brokerage account or by contacting their financial advisor.

2

What is the Sprott Copper Miners ETF investment objective and strategy?

Sprott Copper Miners ETF (Nasdaq: COPP) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Nasdaq Sprott Copper Miners™ Index (NSCOPP™).

Nasdaq Sprott Copper Miners™ Index (NSCOPP™) is designed to track the performance of a selection of global securities in the copper industry, including copper producers, developers, and explorers.

3

What is the energy transition?

The energy transition is a significant global structural change intended to decrease our dependence on fossil fuels in favor of low-carbon and renewable energy. While we believe fossil fuels may likely continue to play a role in our future, substantial global investment and government mandates in favor of low-carbon and renewable energy are driving opportunities in the energy transition industry.

4

What is the Nasdaq Sprott Copper Miners™ Index’s methodology?

The index combines Sprott’s decades of experience in the mining sector with Nasdaq’s renowned index expertise. To be eligible for inclusion in the Nasdaq Sprott Copper Miners™ Index (NSCOPP™), a company must meet the requirements that follow.

Eligibility Requirements

    • Be a security listed on an approved exchange
    • The security’s issuers must be classified by Sprott as a copper producer, developer or explorer
    • Have a free float market capitalization of at least $50 million or $30 million for existing constituents
    • The security must have been publicly traded at least three months prior to the reconstitution reference date
    • A security must have a three-month average daily traded value of at least $50,000 or $30,000 for existing constituents

Constituent Weighting Process

    • The index is a modified free-float market capitalization-weighted index
    • Constituents’ initial weights are determined by dividing each constituent’s free-float market value by the aggregate free-float market value of all constituents
    • Initial weights are adjusted to meet the following constraints:
      • The weighting of the largest individual company, by free float market capitalization, may not exceed 24% of the value of the Index
      • The weighting of the second and third largest companies, by free float market capitalization, may not exceed 10% of the value of the Index each
      • The aggregate weight of securities with a weight greater than 5% may not exceed 49%
      • The weighting of no other individual company may exceed 4.75% the value of the Index

Index Rebalancing

    • The index is rebalanced semi-annually in June and December, effective at the market open on the first trading day following the third Friday
5

Who may want to consider investing in COPP?

Investors that seek pure-play1 access to copper companies that are providing a critical mineral necessary for the clean energy transition. Copper miners that are upstream in the supply chain may be well positioned to benefit from increased investment in the low-carbon and renewable energy sector, the associated upgrades to electrical grids, and the development of clean technology.

6

Who will manage the Sprott Copper Miners ETF?

Sprott Asset Management USA, Inc. is the investment adviser to the Sprott Copper Miners ETF. ALPS Advisors, Inc. is the sub-adviser, and ALPS Fund Services, Inc. serves as the administrator. ALPS Distributors, Inc. is the Distributor for the Sprott Copper Miners ETF and is a registered broker-dealer and FINRA Member. Additionally, State Street Bank and Trust Company serves as the custodian and transfer agent.

7

What are the key benefits of investing in the Sprott Copper Miners ETF?

Essential to energy transmission, copper is a critical mineral across clean energy generation sources and in electric vehicles. It is also critical to upgrades to global power grids that will be essential to the support of new energy sources.

  • Copper provides durability, malleability, reliability and superior electrical conductivity and can be found in the vast majority of transformers, electrical wiring cores and conductors
  • Copper is a key component in the energy grid, as well as in wind, solar, hydro and thermal renewable energy structures
  • An essential component of electric vehicles (EVs), used in the electric motors, batteries, inverters and wiring, and in charging stations

To meet net-zero carbon emissions targets, demand for copper is expected to increase for decades

  • To meet net-zero carbon emissions targets, energy transition-related demand for this critical mineral may increase nearly 4 times by 2040, relative to 20222
  • Governments are mandating the sale of EVs as soon as 2035,3 and many major auto manufacturers have plans to go fully electric as soon as 2030.4 A Typical EV uses approximately 117 pounds of copper, which is 2.4x the copper used in an internal combustion engine5
  • Compared to natural gas and coal, solar and wind farms require significantly more copper. 2.5 times more for solar and onshore wind, and 7 times more for offshore wind.5

The Sprott Copper Miners ETF is the only* ETF to provide pure-play exposure exclusively to copper mining equities essential to the clean energy transition

  • COPP’s holdings are pure-play companies with business operations that are focused on the copper mining sector.
  • Companies that are upstream in the supply chain may be well-positioned to benefit from the increased investment in copper necessary for the clean energy transition.
8

What is clean energy?

Clean energy is energy that has zero carbon emissions and comes from renewable and nuclear energy sources. Currently, nations around the world have committed to the Paris Agreement, which is a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris in December 2015. Its goal is to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels. To meet this goal, emissions need to be reduced by 45% by 2030 to reach net-zero carbon emissions by 2050.7

9

What are critical minerals?

Critical minerals are natural materials that are essential to the generation, transmission and storage of clean energy. Sprott focuses on copper as the critical mineral depended upon for all clean energy transmission.

10

How does the Sprott Copper Miners ETF add value?

  • Currently, investors have limited choice
    COPP is the only ETF to provide exposure exclusively to the large-, mid- and small-cap copper miners that supply a mineral critical to energy transmission, as clean energy grids and technology develop in response to global energy transition goals.
  • With the copper supply-demand gap widening, miners may offer opportunities
    The widening gap between supply and demand could translate into benefits for both copper prices and the mining companies involved. Additionally, an uptick in mergers and acquisitions (M&A) within the industry could further strengthen the position of copper miners.
11

What themes may be driving investor interest in the Sprott Copper Miners ETF?

We believe the Sprott Copper Miners ETF has broad appeal to many investors. The following general themes are driving investor interest.

  • Copper is essential for decarbonization
    The push toward net-zero emissions by 2050, driven by global mandates and goals, is set to escalate the development of copper-intensive infrastructure, such as power grids, electric vehicles (EVs) and clean energy technologies.
  • Copper demand is surging
    Emerging clean-energy technologies require significantly more copper than traditional systems. This surge in demand coincides with an anticipated 86% increase in global electricity consumption by 2050.9
  • Copper supply faces challenges
    The global copper supply faces significant hurdles, including decreasing ore quality, prolonged lead times for opening new mines and an extended period of underinvestment. These factors underscore the critical role of copper mining companies in meeting demand.
  • Copper price dynamics spurring new production
    Rising copper prices may be the catalyst needed to motivate the development of new projects aiming to satisfy the growing appetite for copper.
  • Copper miners may offer opportunities
    The widening gap between supply and demand could translate into benefits for both copper prices and the mining companies involved. Additionally, an uptick in mergers and acquisitions (M&A) within the industry could further strengthen the position of copper miners.
12

Will the Sprott Copper Miners ETF pay distributions?

The Sprott Copper Miners ETF expects to declare and distribute all its net investment income, if any, to shareholders as dividends at least annually and on a pro-rata basis. The Fund may distribute such income dividends and capital gains more frequently, if necessary, to reduce or eliminate federal excise or income taxes on the Fund.

 

 

Please reach out to your Sprott representative at 888.622.1813 or energytransition@sprott.com for additional questions.

* Based on Morningstar’s universe of Natural Resources Sector Equity ETFs as of 3/5/2024.


The term “pure-play” relates directly to the exposure that the Fund has to the total universe of investable, publicly listed securities in the investment strategy.
2 Source: “Critical Minerals Market Review”, International Energy Agency (IEA), July 2023. Data shown for Net Zero Emissions Scenario.
3 Source: Reuters, December 8, 2021.
4 Source: “Which brands are going fully electric and by when?” CarExpert, August 14, 2021.
5 Source: Global Copper Outlook 2022-2040, BloombergNEF. Included for illustrative purposes only.
6 Source: “The Raw Materials Challenge,” McKinsey & Co., January 10, 2022.
7 United Nations Framework Convention on Climate Change (UNFCC).
8 Incentive price is the price at which new mining production is reasonably profitable.
9 Source: IEA World Energy Outlook 2023 Stated Policies.

 

Important Disclosures & Definitions

An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Sprott Copper Miners ETF Statutory Prospectus, which contains this and other information, visit https://sprottetfs.com/copp/prospectus, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing.

The Fund is not suitable for all investors. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund's shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk. The Fund is considered non-diversified and can invest a greater portion of assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single investment could cause greater fluctuations in share price than would occur in a diversified fund.

Shares are not individually redeemable. Investors buy and sell shares of the Sprott Copper Miners ETF on a secondary market. Only market makers or "authorized participants" may trade directly with the Fund, typically in blocks of 10,000 shares.

Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.

The Sprott Copper Miners ETF seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the Nasdaq Sprott Copper Miners™ Index (NSCOPP™).

Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk. Therefore, you should consider carefully the risks listed in the prospectus before investing in the Fund.

Nasdaq®, Nasdaq Copper Miners™ Index, and NSCOPP™ are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Sprott Asset Management LP. The Product(s) have not been passed on by the Corporations as to their legality or suitability. The Product(s) are not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S).

Sprott Asset Management USA, Inc. is the Investment Adviser to the Sprott Copper Miners ETF. Sprott Asset Management LP is the Sponsor of the Fund. ALPS Distributors, Inc. is the Distributor for the Sprott Copper Miners ETF and is a registered broker-dealer and FINRA Member.

ALPS Distributors, Inc. is not affiliated with Sprott Asset Management LP.

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