What is the Best Commodity ETF? Top 12 List
Exchange Traded Funds (ETFs) are one of the broader categories that you need to understand as an investor. Unlike other ETFs that are liquid, the Commodity ETFs are physical.
The Commodity ETFs allow you as an investor to gain exposure to a single or a group of commodities in a low-risk, simple, and cost-effective way.
The Commodity ETFs involve commodities such as energy, agricultural goods, and even precious metals.
What is a Commodity ETF?
The Commodity ETFs concept is simple; an exchange-traded fund that allows you to invest in physical goods like precious metals, natural resources, and agricultural products. You will like Commodity ETFs because it exposes you to an investment that you don't need to learn how to purchase it.
Example of a Commodity ETF
A good basic example of Commodity ETFs is precious metals. Precious metals like Gold and Silver are the most popular Commodity ETF since they are not fragile and cannot spoil even if they are subjected to certain conditions.
4 Types of Commodity ETFs
Four broad types of Commodity ETFs exist. They include;
The equity Commodity ETFs specifically hold stock on firms that are involved in producing, transporting, and storing commodities. If you need exposure to multiple companies in the simplest and inexpensive manner, then the equity Commodity ETFs is the best for you.
Exchange-Traded Notes (ETNs) Fund
This is a debt instrument issued by a bank. The ETNs employ strategies like buying stocks, bonds, and other options to make sure that they match the returns of any underlying assets. The ETNs hold an advantage in that they do not hold any form of tracking error on the commodity they are tracking; thus, it builds your trust.
This type of Commodity ETFs is only limited to precious metals alone. Hence, these funds have the commodity's actual ownership and do not expose your goods to the tracking and counterparty risks.
Are Commodity ETFs a Good Investment?
Yes! We can confidently advise that you invest in Commodity ETFs. They offer you as an investor a good and easy way to a diversified portfolio. You can also trust Commodity ETFs since they offer a hedge against any inflation that may occur during the investment period.
12 Top Commodity ETFs
Vanguard Commodity ETFs
Vanguard is best known for its broad investment in a wide variety of commodity ETFs. One of its best commodities ETF is;
Vanguard Total Stock Market ETF
The Vanguard Total Stock Market ETF exists both as an ETF and a mutual fund. It marks the best Vanguard commodity ETF that you can invest in if you can’t meet the minimum $ 3000 requirement for mutual funds.
Vanguard Total Stock Market ETF is built to cover the performance of a large swaddle of equities, CRSP U.S. to be specific. It also covers a Total Market index that encompasses a mix of small, medium, and large-cap value stocks and growth.
Since Vanguard Total Stock Market ETF is fully invested, it holds minimal cash at specific times, and it’s not covered against the ups and downs of the market. If you need a mainstay ETF of more insistent portfolios that seek exposure to a broader market, then you need to trust Vanguard Total Stock Market ETF.
iShares Commodity ETF
iShares holds numerous Commodity ETFs among their best being;
iShares Commodities Select Strategy ETF
iShares Commodities Select Strategy ETF provides you as an investor with a broad commodity exposure in its quest to seek total returns. With this ETF, you can access different commodities such as metals, energy, agricultural products, and even livestock products.
iShares Commodities Select Strategy ETF seeks to minimize costs that you may incur during the investment plan. It only exposes you to an expense ratio of 0.48%.
Commodity Index ETF
United States Commodity Index Fund
This commodity ETF is designed to track the percentage performance of the price movements of SummerHaven Dynamic Commodity Index Return that issues shares that you can access through the NYSE.
With the United States Commodity Index Fund, you can access commodities such as crude oil, cattle feeder, copper, coffee, platinum, Tin, Platinum, Soybean meal, sugar, cocoa, Aluminum, live cattle, gasoil, wheat, lead, zinc, silver, cotton and many more other physical commodities.
United States Commodity Index Fund permits you a commodity exposure without you necessarily having a commodity features account, convenience exchange, flexibility, and provides market price variation on a daily basis.
Goldman Sacks Commodity Index ETF (S$P GSCI)
INVESCO Optimum Yield Diversified Commodity Strategy Fund
INVESCO Optimum Yield Diversified Commodity Strategy Fund offers its investors exposure to commodity features with no tax hassle of a K-1.
This fund is actively managed and avoids the negative roll yield that is the most common problem with most passive commodity funds.
With INVESCO Optimum Yield Diversified Commodity Strategy Fund, you only incur an expense ratio of 0.25%. This marks it among the cheapest commodity ETF you can invest in.
Agricultural Commodity ETF
Direct exposure to agricultural commodities is now always easy, but the increase in exchange-traded products has eased it. One of the best agricultural ETF is;
Teucrium Soybean Agricultural Commodity ETF
Teucrium Soybean Agricultural Commodity ETF acts as a pool of investor assets that invests I feature contracts. It mainly focuses on Soybean as a single product.
Soybean is a commodity of interest because it comes with numerous uses. It acts as a source of oils, ink, wood substitutes, foam, and even crayons.
If you are looking to make a short-term investment in one agricultural commodity, then Teucrium Soybean Agricultural Commodity ETF is the best option for you/. You will only incur an expense ratio of 1.15%.
Leveraged Commodity ETF
The Leveraged Commodity ETF offers you exposure to magnified commodity benchmarks. Since this commodity is leveraged, it generates more amplified returns, thus making it the commodity ETF.
Leveraged Commodity ETF only exposes you to an expense ratio of 1.07% with guaranteed high annual returns.
Oil Commodity ETF
The oil commodity ETF fronts the United States 12 Month Natural Gas Fund as the best ETF for oil commodity.
United States 12 Month Natural Gas Fund
This Fund is specifically attached to natural gas instead of crude oil. It tracks the natural oil prices achieving this by holding 12 months’ worth of features contracts that are traded in the line of natural gas.
If you are looking forward to trading in the natural oil sector, then you can put trust in the United States 12 Month Natural Gas Fund.
Commodity ETF 3X
Leveraged 3X Energy Commodity ETF
The Leveraged 3X Energy Commodity ETF serves to provide you as an investor with a daily or monthly return or either a single or a basket of commodities. If your focus is on commodities such as coal, crude oil, heating oil, natural gas, or gasoil, then Leveraged 3X Energy Commodity ETF is the best choice for you.
The Leveraged 3X Energy Commodity ETF makes use of features contracts to achieve their main goals and can either be long or inversed.
iShares Silver Trust
As its name suggests, the iShares Silver Trust is a form of ETF that holds physical silver metal. Silver is among the precious metals and gold, but it has more industrial use and commercial application than gold.
Among the precious metals ETFs you can invest in, iShares Silver Trust is the best since it is cheap. It also has a ready market due to many applications of silver.
Teucrium Corn Commodity ETF
If you are interested in investing in corn related investments, then the Teucrium Corn Commodity ETF is the best commodity ETF you can consider.
Since corn is the most used agricultural product in the market, there is always a tremendous demand for this commodity. However, it is not easy to track the prices and market demand of corn as an individual investor, and this is where the role of Teucrium Corn Commodity ETF comes in.
It makes use of features contracts as the underlying investment to make sure that you receive the best dividends from the investments made.
Aberdeen Standard Physical Gold Shares ETF
The Aberdeen Standard Gold Trust offers these ETF shares. The Aberdeen Standard Physical Gold Shares ETF majorly deals with tracking of Gold stocks and market prices for you.
It has the objective of having the shares reflecting the performance in the price of gold bullion minus the trust’s operation expenses. The Aberdeen Standard Physical Gold Shares ETF is the best for you as an investor who wants a convenient and cost-effective way of investing in physical gold.
Wisdom Tree Continuous Commodity Index Fund
The Wisdom Tree Continuous Commodity Index Fund allows you access and exposure to broad-based commodities and expanding your portfolio. This ETF holds about 17 commodities that have equal value.
Wisdom Tree Continuous Commodity Index Fund is a bit more expensive than other ETFs in the same category but offers unique exposure and is worth it for you as an investor seeking balanced access to commodities. You will need to incur an expense ratio of 0.75% to invest with Wisdom Tree Continuous Commodity Index Fund.