The Best Commodity ETFs

Due to increased globalization and the lowering of trade barriers, many commodities have seen a sharp rise in demand as their markets expand. We’ve gathered information on some of the best ETFs currently available to new investors.

Chetan Shekar

Contributor, Benzinga

June 18, 2019 Updated: May 28, 2020

Investing directly in commodities like raw materials or cash crops can require extensive research and personal connections with distributors. A direct investment can be tough to manage, but you can put money into a bundle of these commodities with commodity exchange-traded funds (ETFs). 

Commodity ETFs hold assets in companies that source and transport agricultural products, natural resources and precious metals. ETFs from this sector can also consist of futures and derivatives that track the price of underlying commodities. These commodities can include cash crops, natural resources and precious metals. 

Check out Benzinga’s guide to learn more about the best commodity ETFs right now.

Commodity ETFs Biggest Gainers and Losers

Stay on top of the latest commodity ETFs on the stock market with the most profits and losses. 

Premarket Commodity ETFs

Take a look at the stock quotes of commodity ETFs before the trading session opens on the stock exchange.

Aftermarket Commodity ETFs

Here’s a glance at the price movements of commodity ETFs after trading sessions are closed on the stock exchange. 

Why Invest in Commodity ETFs?

Here are 3 reasons you should consider investing in commodity ETFs. 

1. Commodity ETFs can help diversify your portfolio. 

Commodity ETFs fund a wide range of industries such as metals, livestock, agricultural produce and natural resources. Some of these ETFs focus on a single commodity while others offer broader exposure to numerous commodities.

You can also choose to invest in commodity ETFs with underlying commodities such as oil, gold and water. You can also put your money behind commodity stock ETFs that hold assets in companies that produce and distribute commodities. 

There are more than 100 ETFs from the commodities sector. Each ETF has a varying volatility rate to suit your risk profile and portfolio.  

2. Commodity ETF performances are inversely related to stocks. 

Commodities can rise in value when stocks crash and vice versa. Market downward spirals have driven high demand for assets such as gold and oil, and investors were met with limited trading capacity. But commodity ETFs can make it easier to buy and sell assets at the click of a button. 

Stock markets took a severe hit during the 1st quarter of 2020. But during this time, the World Gold Council reported gold-backed ETFs added 298 tonnes of gold or $23 billion worth of assets  — the highest quarterly amount and the largest tonnage added since 2016. Additionally, oil ETFs such as SPDR S&P Oil & Gas Exploration & Production ETF (NYSE ARCA: XOP) rose by 5.2% and Invesco Dynamic Energy Exploration & Production Portfolio (NYSE ARCA: PXE) rose by 5.1% in February 2020.    

3. Commodity ETFs can be leveraged for greater returns. 

Leveraged commodity ETFs are designed to track benchmark indices with a double or even triple rate of return. These ETFs can come in handy to make quick profits during economic crises. But you should only invest in these leveraged ETFs if you have a high-risk profile.

There are management fees and interest rates involved in leveraged commodity ETFs that could have a compound effect on your returns from long-term investments. The leverage rates are reset on a daily basis. You can often make most of your gains off of these ETFs in a 1-day trading session. 

Top 3 Commodity ETFs by AUM

ETFs with underlying commodities are volatile and can vary in stock value throughout the year. The price of agricultural commodities depends on harvest conditions. Oil and natural gas commodities are inclined toward the trade policies between countries and metal commodities are subject to availability. 

You should consider the expense ratios, stock quotes, index performance, historical returns record, liquidity and total assets under management (AUM) before investing in ETFs. 

Here are some of the top ETFs by AUM based on these criteria.  

1.  iShares Gold Trust (NYSE ARCA: IAU)

iShares Gold Trust ETF was launched in 2005. It tracks the Gold Bullion index and assesses the spot price of gold by holding gold bars in a secure vault. 

iShares Gold Trust ETF has a total AUM of $23 billion. It has a low expense ratio of 0.25% and trades over 21 million shares per month. This ETF has a 3-year return rate of 31.94% and 38.40%. 

2. Aberdeen Standard Physical Palladium Shares ETF (NYSE ARCA: PALL)

Launched in 2010, Aberdeen Standard Physical Palladium Shares ETF mirrors Palladium Bullion that holds several bars of Palladium in a secure vault. This ETF is 1 of the only ways you can invest in this metal as pure Palladium miners are hard to come by. 

Aberdeen Standard Physical Palladium Shares ETF has an expense ratio of 0.60%. It has a total AUM of $261 million and a monthly average trade volume of 33,404 shares. This ETF has a 3-year return rate of 133.27% and a 5-year return rate of 143.58%. 

3. ProShares UltraShort Bloomberg Crude Oil ETF (NYSE ARCA: SCO)

ProShares UltraShort Bloomberg Crude Oil ETF has been on the market since 2008. It inversely corresponds to the ProShares UltraShort DJ-UBS Crude Oil index at a negative 200% return rate. If you are looking for a short-term put option for crude oil, this ETF could be a good addition to your portfolio. 

ProShares UltraShort Bloomberg Crude Oil ETF is highly liquid with more than 7 million shares traded per day. It has a total AUM of $173 million with an expense ratio of 0.95%. This ETF has a 3-year return rate of 19.08% and a 5-year return rate of 60.25%. The leverage on this ETF gets reset daily and is not recommended for a buy-and-hold option. 

Best Online Brokers for Commodity ETFs

Find and invest in the top ETFs with an online broker. You can trade ETFs commission-free through most online brokerages. Benzinga has put together our picks for some of the best online brokers to get you started.

Read Review

Commissions

$0

Account Minimum

$0

get started

1. TradeStation

Unlock your investing potential with advanced trading tools on TradeStation. You can open a TS SELECT account with a $2,000 minimum deposit or a TS GO account with a $0 minimum deposit. 

TradeStation allows trade on desktop, web and mobile applications. You can get in touch with TradeStation’s customer support by phone, email, live chat or chatbot. The website also gives you access to tons of educational resources. 

Read Review

Commissions

$0 when you trade stocks, ETFs, options, and mutual funds online

Account Minimum

$0

get started

2. Firstrade

Firstrade is an online broker with a full suite of financial products such as stocks, ETFs, options, fixed-income and mutual funds. You can open an account for free. 

Firstrade is fully-customizable and you can manage your account and trade from your desktop, iPad and smartphone. It features a QuickBar tool that gives you the fastest and simplest ways to trade without shifting between screens for research. 

Read Review

Commissions

$0 $6.95 for OTC Stocks

Account Minimum

$0

Open an account

3. TD Ameritrade

TD Ameritrade is an industry-leading online broker with more than 40 years of expertise. It has pioneered a number of trading technologies to make investing more efficient. There is no minimum amount required to open an account. 

TD Ameritrade lets you take advantage of 3rd-party research and planning tools to improve your trading tactics. It also features a live Twitter feed on the platform to keep you updated on the latest financial buzz.     

Curated Commodities for Trade

Commodity ETFs can expose you to a spectrum of penny stocks and small, mid and large-cap companies to expand your stock portfolio. With a little experience under your belt, you can gain an edge during complex stock market conditions by trading shares of commodity ETFs.