I think these surging exchange-traded funds (ETFs) merit serious consideration this month. Here’s why.
Gold fund
Gold’s multi-decade bull run is (in my opinion) showing room for further significant upside. A multitude of risks facing the US and the dollar — combined with broader factors like rising inflation and geopolitical stress — mean fresh records far above current levels now look highly likely.
Goldman Sachs thinks prices could reach $5,000 per ounce by the end of next year.
In this climate, buying the iShares Physical Gold (LSE:SGLN) demands serious consideration in my book. Backed by physical gold, this fund is the UK’s most liquid bullion ETF, meaning investors can buy in and sell up extremely easy and with low spreads.
It also has a rock-bottom total expense ratio of 0.12%, one of the lowest on the market.
Remember there’s no guarantee that gold prices will continue rising, however. A downturn would naturally have bad consequences for the fund.
Copper exposure
Copper is another popular commodity that’s worth looking at this October. Red metal futures have rocketed in recent weeks, after weather-related disruptions caused the closure of Grasberg, the world’s second-largest mine.
It’s the latest in a string of production-related hiccups from major producers. With supply problems growing and demand enjoying structural drivers like the growing green and digital economies, now could be the time to consider a copper-based ETF.
The Global X Copper Miners ETF (LSE:COPX) is one I like the look of.
There’s a big difference between investing in a metal producer fund like this versus a copper price tracker. With these, investors leave themselves exposed to potential production issues that can dampen performance.
Still, with holdings in 39 different copper miners (including heavyweights like Glencore and Antofagasta), this ETF spreads the risk quite effectively.
When copper prices rise, producer ETFs like this can outperform as their profits can rise more dramatically. Be mindful, though, that this leverage effect can act in reverse when red metal values drop.
Defence star
My final fund selection here is the HANetf Future of Defence (LSE:NATP) product. This is an ETF I hold in my own portfolio to capitalise on booming defence spending among NATO nations (and partner countries).
I plumped for this one because it gives me defence exposure but ‘with a twist.’ It holds shares in some of the world’s largest weapons builders like Rheinmetall, BAE Systems and Northrop Grumman. In total, its basket contains 60 different businesses.
However, it also has a high weighting of cybersecurity stocks like Palo Alto and CrowdStrike. This provides it with added long-term growth potential, in my view. As HANetf itself comments: “NATO’s inclusion of cyber and network security in new spending targets reflects the growing threat of geopolitically motivated attacks on critical infrastructure.“
Supply chain issues remain a problem across the defence industry. If this persists, it’s possible this fund could underperform expectations. But in the evolving geopolitical climate I’m optimistic it can deliver stunning returns.
