Best commodity ETFs to buy in 2023
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This page explains everything you need to know about the best commodity ETFs and how to invest in them. Find out what a commodity ETF is, the best places to invest, and discover the top five options on the market right now.
What are the top commodity ETFs to buy?
Below, we have compiled our analysts’ consensus of the five best commodity ETFs to buy. In the table, you can find the full name of the ETF, along with its market ticker. To learn more about why each ETF is on our list, scroll down.
| # | ETF symbol | ETF name | Where to Trade |
|---|---|---|---|
| 1 | PDBC | Invesco Optimum Yld Dvsfd Cmd Str No K 1 ETF | |
| 2 | DBC | Invesco DB Commodity Index Tracking Fund | |
| 3 | COMT | iShares U.S. ETF Trust iShares GSCI Commodity Dynamic Roll Strategy ETF | |
| 4 | FTGC | First Trust Global Tactical Commodity Strategy Fund | |
| 5 | GSG | iShares S&P GSCI Commodity-Indexed Trust |
1. Invesco Optimum Yield Diversified Commodity Strategy No K-1 (NASDAQ: PDBC)
The actively managed Invesco Optimum ETF is designed to exceed the performance of DBIQ Optimum Yield Diversified Commodity Index Excess Return. This is an index composed of futures contracts on 14 of the world’s most heavily traded commodities including precious metals, industrial metals, agricultural materials, and commodities used in the energy sector.
The main reason this ETF is on our list is its sheer scale. It is the largest commodity ETF on the market, with nearly $5 billion worth of assets under the fund’s management. That size protects it against volatility and makes it a safe way to invest in commodities.
Thanks to commodity prices rising dramatically across the board in 2022, the Invesco ETF has had a particularly good run of it in recent months. This is the cornerstone of a good commodity investment, as it offers a way to balance your portfolio against volatility in stock markets. You can find the best ETF platforms to buy this and other ETFs further down below this article.
2. Invesco DB Commodity Index Tracking Fund (NYSEARCA: DBC)
The DBC ETF is similar to the PDBC ETF, except it is designed to accurately track all changes to the same DBIQ Index – positive or negative – rather than outperforming it. DBC is intended to be a cost-effective and convenient way to invest in commodity futures.
Like PDBC, DBC is a huge ETF, with just under $3 billion in assets under management. In addition, it tracks the same futures contract values on the same 14 commodities.
The only real disparity between the two funds is the market performance of the Invesco DB ETF, which has experienced strong growth in recent years. It is the strength of the returns DBC has provided to investors that secured it a place on this list.
3. iShares U.S. ETF Trust iShares GSCI Commodity Dynamic Roll Strategy ETF (NASDAQ: COMT)
COMT is an actively managed ETF that is intended to track the performance of the S&P GSCI Dynamic Roll (USD) Total Return Index, which measures the performance of futures contracts in the energy, metals, agriculture, and livestock sectors.
With around $2.5 billion in assets under management, COMT is a large ETF that has performed fairly well in the last year, despite struggling in the five preceding years.
The strong combination of assets within this fund and the low expense ratio of less than 0.5% are key reasons COMT is on our list.
4. First Trust Global Tactical Commodity Strategy Fund (NASDAQ: FTGC)
FTGC is an actively managed ETF that seeks total return and a relatively stable risk profile while providing investors with commodity exposure. The fund doesn’t directly hold futures contracts, instead, its Cayman Islands-based subsidiary holds them, and it is also eligible to hold other commodity ETFs.
With over $2 billion in assets under management, FTGC is another fund that has seen dramatic performance since the pandemic. Already on an upswing going into 2022, Russia’s attack on Ukraine sent it even higher and close to its all time highs.
The First Trust Global Tactical Commodity ETF could be a strong option for those looking for a less risky way of gaining exposure to commodities. The fund’s performance and low risk profile are key reasons it has secured a place on this list.
5. iShares S&P GSCI Commodity-Indexed Trust (NYSEARCA: GSG)
If you are looking for a diversified blend of commodity exposure, GSG could be the right ETF for you. This ETF provides convenient and flexible access to the energy, industrial and precious metals, agricultural, and livestock markets. The fund has around $1.5 billion in assets under its management. Therefore, it can also be considered as an energy ETF or an agricultural ETF.
The GSCI fund has a lot of flexibility to switch between different commodity sectors, which stands it in good stead to adapt to rapidly changing international events. As the price of things like oil, natural gas, and nickel soared in early 2022, GSCI changed tack to put more than half its money into energy commodities.
This sort of flexibility is what makes GSCI a good investment, particularly a t a time when the future outlook across all commodities is uncertain. The ability to move money around from cash to futures contracts gives GSCI the freedom to capitalise on a fast-moving situation.
Where to buy the best commodity ETFs
Buying ETFs – or trading them – can be achieved in the exact same way you would purchase a stock. Simply sign up to a broker, deposit funds and invest. Click any of the links below to sign up to one of our recommended platforms with low fees and instant execution.
What is a commodity ETF?
A commodity ETF is a tradable fund that is designed to offer exposure to the price performance of a selection of commodities. A commodity is a raw material or agricultural product that can be bought and sold, while an exchange-traded fund (ETF) is a financial instrument that you can buy and sell on a stock exchange. They are designed to track the overall performance of a particular index or industry.
A commodity ETF can be a fund that simply tracks the price of something like oil or gold, or it can be a fund that owns stocks in companies that operate in a particular industry. For example, an oil ETF might own crude oil futures, or it might own stocks like BP, Shell, and Exxon.
Are commodity ETFs a good investment?
That really depends on the specific commodity. Different commodities will perform well in different economic conditions. For example, industrial commodities like fossil fuels perform best when economic health is strong and investment in infrastructure is high. By contrast, safe haven commodities like gold perform best during times of high inflation and economic unrest.
Investing in a commodity ETF is a way to protect your portfolio from the fluctuations of owning just a single commodity. Investing in an ETF is also very simple, whereas some of the more popular ways of generating returns with commodities are more complex.
As commodity prices are heavily impacted by geopolitical events and international relations, it’s important to keep track of the latest news if you decide to invest. Things like Russia’s invasion of Ukraine can cause dramatic shifts in the commodity markets and need to be taken into account. Follow the most up to date news and analysis below.
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