10 of the Best Commodity ETFs for Investors

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The Best Commodity ETFs

Investing in commodities can be a great way to diversify your portfolio and protect yourself from market volatility. Commodities are physical goods or materials used in producing other goods, and they are often traded on global markets.

Examples of commodities include agricultural products like wheat and corn, energy resources like oil and natural gas, precious metals like gold and silver, and industrial metals like iron and steel.

Investing in commodity exchange-traded funds (ETFs) is one of the easiest ways to get exposure to commodity markets. ETFs are exchange-traded funds that track an index or a collection of assets, and they can be bought and sold on stock exchanges just like regular stocks. In this article, we’ll look at the best commodity ETFs you may want to consider.

When you’re ready to buy a commodity ETF, you can use an app like Public.comWebull, or Moomoo to place commission-free trades. You can even purchase fractional shares if you don’t have enough money for a full share.

This article aims to highlight some ETFs that may be a good fit if you’re looking to invest in commodities. This is not investment advice, and it is possible to lose money with these ETFs. If you have questions about your situation, seek personalized help from a financial professional.

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The Best Commodity ETFs

If you’re interested in adding commodities to your portfolio, here are a few ETFs you may want to consider.

The details for each commodity ETF listed below are from VettaFi. They are valid as of the day this article was updated, August 22, 2022. Be sure to check the current details as they will change with time.

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1. Invesco DB Commodity Index Tracking Fund (DBC)

DBC tracks the DBIQ Optimum Yield Diversified Commodity Index Excess Return, which includes futures contracts on 14 of the most heavily-traded commodities. While some of the ETFs we’ll cover on this page provide exposure to a particular commodity, DBC takes a broader approach.

When interest rates rise, commodity values tend to increase, while stocks and bonds are likely to decrease. So although this commodities ETF is volatile, it may be an excellent addition to your portfolio in the right situation.

One downside to DBC is that investors will receive a K1 every year, which will likely add some additional work at tax time. However, the Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) uses a very similar strategy but with a different structure. PDBC investors receive a standard 1099 instead of a K1, simplifying tax returns.

DBC Details

Price: $26.02
Expense Ratio: 0.87%
Annual Dividend Yield: 
N/A
1 Year Return: 
41.63%
3 Year Return: 
77.82%
5 Year Return:
80.01%

2. iShares U.S. ETF Trust iShares GSCI Commodity Dynamic Roll Strategy ETF (COMT)

COMT is another option for investing in a broad range of commodities. However, COMT uses a different approach than DBC and PDBC.

The “dynamic roll” referenced in this ETF’s name refers to the fund’s approach to investing in futures contracts. Each commodity futures contract has an expiration date, and when they expire, COMT uses a rules-based futures strategy to select the next contract to minimize cost and maximize returns.

COMT Details

Price: $38.87
Expense Ratio: 0.48%
Annual Dividend Yield: 
0.26%
1 Year Return: 
40.86%
3 Year Return: 
55.18%
5 Year Return:
66.20%

3. First Trust Global Tactical Commodity Strategy Fund (FTGC)

FTGC provides investors with exposure to commodities, but the specific holdings will vary depending on market conditions. The fund may be heavily-weighted towards metals, agriculture, oil, gas, or other commodities.

This is an actively-managed fund that does not track a particular index. Because it’s actively managed, the expense ratio is higher, and performance will vary depending on the strategy’s effectiveness.

FTGC Details

Price: $27.24
Expense Ratio: 0.95%
Annual Dividend Yield: 
N/A
1 Year Return: 
25.54%
3 Year Return: 
64.63%
5 Year Return:
50.34%

4. United States Oil Fund (USO)

While there are many different commodities you can invest in, oil remains one of the most popular options. And one of the easiest and most popular ways to invest in crude oil futures is USO.

When oil prices are on the rise, USO can perform very well. However, it’s highly volatile and will also lose value quickly when oil prices fall.

USO Details

Price: $73.70
Expense Ratio: 0.79%
Annual Dividend Yield: 
N/A
1 Year Return: 
65.42%
3 Year Return: 
-18.79%
5 Year Return:
-7.15%

5. United States 12 Month Oil Fund LP (USL)

USL presents another way to invest in crude oil futures, but it works differently than USO. USL has a slightly lower risk profile. The futures contracts are spread throughout the upcoming 12 months to diversify across multiple maturities rather than being heavily weighted toward the next month.

USL Details

Price: $37.18
Expense Ratio: 0.88%
Annual Dividend Yield: 
N/A
1 Year Return: 
60.62%
3 Year Return: 
83.92%
5 Year Return:
114.50%

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6. SPDR Gold Shares (GLD)

GLD is an extremely popular gold ETF that invests in gold bullion. Gold is a common choice for anyone wanting to add commodities or alternative assets to a portfolio.

Gold is often viewed as an inflation hedge or a safe harbor when the value of stocks and bonds drops.

While many of the other ETFs covered in this article invest in futures, GLD is backed by physical bars of gold bullion. So the underlying commodity is gold, not gold futures.

GLD Details

Price: $161.82
Expense Ratio: 0.40%
Annual Dividend Yield:
N/A
1 Year Return: 
-2.33%
3 Year Return: 
13.97%
5 Year Return:
33.05%

7. iShares Silver Trust (SLV)

Silver is highly-useful in today’s world, including for producing semiconductors. And like gold, silver is another precious metal often seen as a hedge against inflation.

Like GLD, this commodity fund does not invest in futures. Instead, it’s backed by physical silver stored in secure vaults. This commodity ETF isn’t likely a long-term buy-and-hold investment for most people, but it may provide stability as a short-term investment at the right time.

SLV Details

Price: $17.49
Expense Ratio: 0.50%
Annual Dividend Yield: 
N/A
1 Year Return: 
18.41%
3 Year Return: 
9.55%
5 Year Return:
9.01%

8. Teucrium Corn Fund (CORN)

Corn is one of the world’s most important agricultural commodities, and you can invest in this single commodity very easily with CORN.

Although it’s unlikely to be a long-term buy-and-hold investment, CORN could be an excellent choice in the right situation. Corn is not only essential as a food staple but it’s also used in a wide range of products, from gasoline to plant-based plastics.

It’s important to note this fund’s high expense ratio of 1.92%. However, if you’re interested in corn as an investment, you may consider this exchange-traded fund.

CORN Details

Price: $25.46
Expense Ratio: 1.92%
Annual Dividend Yield: 
N/A
1 Year Return: 
22.68%
3 Year Return: 
66.23%
5 Year Return:
39.52%

9. Teucrium Wheat Fund (WEAT)

Wheat is another important commodity, and Teucrium offers this fund for those who want an easy way to invest in wheat futures. The fund invests in futures spread across multiple maturities to minimize risk. However, WEAT is still a risky investment, and it may lose value quickly when wheat prices fall.

Like CORN, WEAT also has a high expense ratio of 1.94%.

WEAT Details

Price: $8.07
Expense Ratio: 1.94%
Annual Dividend Yield: 
N/A
1 Year Return: 
10.03%
3 Year Return: 
54.60%
5 Year Return:
19.52%

10. Teucrium Soybean ETF (SOYB)

SOYB is the third fund we’re featuring in this series from Teucrium. If you want to gain exposure to soybeans, SOYB is among the best ways to do it.

Like WEAT and CORN, SOYB is not an ideal long-term buy-and-hold investment, but it can be useful for short-term investors when soybean prices are rising.

SOYB Details

Price: $27.03
Expense Ratio: 1.991%
1 Year Return: 
16.36%
3 Year Return: 
74.65%
5 Year Return:
48.90%

Why Invest in Commodities?

Commodity ETFs like the ones listed above may not be the cornerstone of your long-term investing plans (see our list of the best ETFs for long-term growth). However, there are a few specific reasons why you might want commodities in your portfolio.

  • Inflation hedge. Commodities are an excellent way to protect yourself from inflation because they usually increase in value along with inflation. Inflation has been a hot issue in 2022, and many investors are concerned about inflation’s impact.
  • Diversification. Adding commodities to your portfolio can help you diversify your holdings and reduce overall risk. This is because commodities often move differently than stocks and other financial assets. For example, when stock prices fall, commodity prices may rise (or vice versa).
  • Hedge against market volatility. Commodities can also be used to hedge against market volatility. If the stock market crashes, commodity prices may not fall as much (or even rise). This makes commodities a good investment for times when the stock market is expected to be volatile.

The Risks of Investing in Commodities

Like any other investment, there are risks associated with investing in commodities.

  • Commodity prices are volatile. The prices of commodities can be very volatile, so you could lose money quickly.
  • Commodities are subject to supply and demand. The prices of commodities are also affected by supply and demand. The price will go up if there’s more demand for an item than supply. But the price will go down if there’s more supply than demand.
  • Many outside factors. The prices of commodities are impacted by many factors, including weather, politics, and the economy. This means that it can be difficult to predict where prices will go in the future. What seems like a good investment today may turn into a bad investment tomorrow because of outside factors.

Final Thoughts on Commodity ETFs

While commodities may not be a part of your long-term buy-and-hold strategy, there are several scenarios where you may benefit from having them in your portfolio.

We’ve covered some of the most popular and best commodity ETFs here, so evaluate the details, consider your situation, and decide if any of them would be a good addition to your portfolio.



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