What are MM’s thoughts on WIRE & DRR?

Hi Ian,

WIRE is actually an ASX listed feeder fund which provides exposure into the COPX ETF which is listed in the US, we actually hold the COPX directly in our Global Macro ETF Portfolio. Neither are hedged and their expense ratio is the same (0.65% pa), so we think they are a good way to play a broad view around copper with a diverse portfolio of stocks. Sandfire makes up 2.48% of the portfolio. Worth noting a couple of things. In an ETF like this, miners that produce other commodities do feature, BHP for instance is a 5% weighting (5th largest holding) and last year copper made up only ~20% of their earnings (which was less than their Coal division) while you are paying an annual fee to hold this which you generally don’t when holding direct equities. We like Copper for the coming years, although we’re cautious short term given our view around the $US.

In terms of Deterra (DRR), it’s simply a flow of Iron Ore royalties so will very much track the Iron Ore price – it’s a good way of playing it for those that want to avoid operational risk of a direct mining company. It’s expected to yield 5.3% over the coming year, however that will be dependent on where the Iron Ore price is. At $US124/tonne, we think this is the top of the range and it should trade between $US80-$US120 in the foreseeable future, so we’re not keen on chasing strength in DRR. We would be reluctant to call this a low risk income stock given it’s simply a price taker exposed to one commodity.

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Deterra (DRR)

LAST UPDATED 10/02/2023 13:56

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Deterra (DRR)

LAST UPDATED 10/02/2023 13:56