EPU: An Attractive ETF For Playing Higher Metals Prices

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I don’t know much about Peru, outside of the fact that they make some great ceviche and chocolate. But I’ve been thinking about the country a lot lately. That’s because the iShares MSCI Peru ETF (EPU) was one of the funds in our international universe to finish recent trading at new highs, writes Steve Strazza, chief market strategist at AllStarCharts.

At first, I was puzzled by this. It was a sea of red out there. Everything got hit. Not just in the US, but across the globe. Then I looked at the fund’s holdings and realized how it happened. EPU is basically a big basket of metals stocks. Roughly 50% of the fund is invested in materials. Here it is resolving higher from a multi-year base.

A graph of a stock market  AI-generated content may be incorrect.

Gold and silver miners were seemingly the only stocks that worked on Wednesday. Both of the shiny metals looked fantastic, and silver was recently seen breaking out. EPU’s exposure to precious metals is precisely why it was able to stick the landing at new cycle highs despite the broad market selloff.

The more I think about that, the more I really like it. I got long EPU and I’m targeting 70.

I want all the international exposure I can get. I’m also always looking for uncorrelated assets. This offers a bit of that too, particularly in the current environment. We’ve had plenty of days this year where metals seem to be the only thing working. I think we’ll have more.

EPU also has some serious copper exposure with Southern Copper Corp. (SCCO), which is a chart I like the look of. It even has a big bank anchoring the fund as the top holding, which is why it pays such a juicy 5% yield.


About the Author

As director of research for All Star Charts, Steve Strazza brings a unique perspective and diverse background experience to the world of technical analysis. He found an affinity for financial markets during his first job out of college as a big-four CPA auditing some of Wall Street's largest broker-dealers. Mr. Strazza has spent recent years writing as an independent research analyst while working on a variety of fintech projects.


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