14 Popular Commodity ETFs (Pros & Cons + An Alternative)

February 16, 2023

A commodity ETF is an exchange traded fund (ETF) that invests in physical commodities. These include agricultural goods, food staples, natural resources, and precious metals.

Commodity ETFs are especially popular amongst investors looking to hedge their portfolios against inflation.  

But they also present some risks that investors should be aware of. 

Let’s look at 14 popular commodity ETFs, the three main types of ETFs, and how you can buy them. We’ll explore the advantages and disadvantages of this asset class and whether it makes a good investment

We’ll also cover an attractive alternative investment – blue-chip art.

14 Commodity ETFs To Consider Investing In (Based on Historical Performance)

Here are some of the most sought-after commodity ETFs based on their past performance. (Data source: Yahoo Finance): 

1. United States Oil Fund (USO)

This fund invests primarily in futures contracts of light crude oil, diesel-heating oil, gasoline, natural gas, and petroleum-based fuels.

Key Data (Year ending 12/31/2022):

  • AUM (Assets Under Management): $1,775.4 M
  • Expense Ratio: 0.81%
  • Average Annualized Return (AAR): 29.30%

2. United States Natural Gas Fund (UGO)

This natural gas ETF tracks the percentage movements of the natural gas futures contract on the NYMEX (New York Mercantile Exchange). 

This single commodity fund is the largest natural gas ETF listed on the NYSE Arca, an electronic securities exchange in the US where exchange traded products and equities are listed. 

The fund invests in natural gas futures, swaps, and forwards.

Key Data (Year ending 12/31/2022): 

  • AUM: $743,54M
  • Expense Ratio: 1.11%
  • AAR: 14.79%

3. SPDR Gold Trust (GLD)

GLD was the first ETF to invest directly in physical gold. The fund tracks the gold spot price of the underlying asset — gold bars held in London vaults — minus expenses and liabilities.

Key Data (Year ending 12/31/2022): 

  • AUM: $56.71B
  • Expense Ratio: 0.40%
  • AAR: -0.82%

4. iShares Silver Trust (SLV)

This single commodity fund aims to reflect the market performance of one of the most popular precious metals: silver.  

The price of the fund’s shares fluctuates according to the price of silver. Shares are bought and sold at market price, not NAV (Net Asset Value). 

Key Data (Year ending 12/31/2022): 

  • AUM: $10.98B 
  • Expense Ratio: 0.50%
  • AAR: 3.21%

5. Invesco DB Agriculture Fund (DBA)

This agricultural commodity fund tracks changes in the DBIQ Diversified Agriculture Index Excess Return level, along with interest income from other holdings, particularly TIPS (Treasury Inflation Protected Securities) and money market income. 

The index is composed of futures contracts on some high liquidity, widely-traded agricultural commodities. The fund (DBA) and the index used to track it are rebalanced and reconstituted annually in November.

Key Data (Year ending 12/31/2022): 

  • AUM: $992.68M
  • Expense Ratio: 0.85%
  • AAR: 2.70.%

6. Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF

The fund offers exposure to various heavily traded global commodities through futures contracts and other financial instruments. 

Its objective is long-term capital appreciation. It does so through an investment strategy designed to exceed the performance of the benchmark index – DBIQ Optimum Yield Diversified Commodity Index Excess Return.  

Key Data (Year ending 12/31/2022): 

  • AUM: $6.47B
  • Expense Ratio: 0.62%
  • AAR: 19.29%

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

The fund invests in commodity futures contracts, exchange-traded commodity linked instruments, and commodity linked total return swaps known collectively as “Commodities Instruments”. 

Investments are made through a wholly-owned subsidiary of the fund organized under the laws of the Cayman Islands. 

Key Data (Year ending 12/31/2022): 

  • AUM: $3.4B
  • Expense Ratio: 0.95%
  • AAR: 17.24%

8. iShares GSCI Commodity Dynamic Roll Strategy ETF (COMT)

This commodity exchange traded fund tracks an index composed of a broad commodity exposure with enhanced roll selection. 

It invests in cash collateral, cash, money market instruments, and futures contracts. 

Key Data (Year ending 12/31/2022): 

  • AUM: $1.11B
  • Expense Ratio: 0.48%
  • AAR: 18.89%

9. Abrdn Bloomberg All Commodity ETF (BCD)

The investment objectives of this commodity ETF are results that correspond to the Bloomberg Commodity 3-Month Forward Total Return index. 

The fund invests in gold, natural gas, brent crude oil, soybean, copper, and other commodity futures. 

Key Data (Year ending 12/31/2022): 

  • AUM: $283.25M
  • Expense Ratio: 0.35%
  • AAR: 0.17%

10. Abrdn Physical Palladium Shares ETF (PALL)

This fund offers investors exposure to palladium, one of the world’s most sought-after precious metals.

It is designed to track the spot price of palladium bullion: physical metal bar assets held in a secure vault. 

Key Data (Year ending 12/31/2022): 

  • AUM: $287.91M
  • Expense Ratio: 0.60%
  • AAR: -10.58%

11. Abrdn Physical Precious Metals Basket Shares ETF (Shares)

The objective of this commodity ETF is to reflect the price performance of its silver, platinum, palladium, and gold bullion holdings. 

If you want a cost-effective and convenient way to invest in physically-backed precious metals, this fund is a good option. 

Key Data (Year ending 12/31/2022): 

  • AUM: $1.02B
  • Expense Ratio: 0.60%
  • AAR: -0.30%

12. Invesco DB Oil ETF (DBO)

This is a rules-based index made up of futures contracts on light sweet crude oil (WTI). The fund seeks to track changes in the level of the DBIQ Optimum Yield Crude Oil Index Excess Return TM over time. 

Additionally, it tracks the income from the fund’s holdings of US Treasury securities, money market funds, and T-Bill ETFs.

Key Data (Year ending 12/31/2022): 

  • AUM: $295.91M
  • Expense Ratio: 0.75%
  • AAR: 13.22%

13. Invesco DB Commodity Index ETF (DBC)

The fund seeks to track changes in the level of the DBIQ Optimum Yield Diversified Commodity Index Excess Return, plus the interest income from the fund’s holdings of US Treasury securities and money market income. 

The index is a rules-based one composed of futures commodities contracts. The fund and the index by which it is measured are rebalanced annually in November.

Key Data (Year ending 12/31/2022): 

  • AUM: $2.54B
  • Expense Ratio: 0.85%
  • AAR: 19.69%

14. Invesco DB MS Energy (DBE)

DBE tracks an index of five energy-related futures contracts. 

The fund selects contracts based on the shape of the futures curve, with the aim of minimizing contango.

Key Data (Year ending 12/31/2022): 

  • AUM: $107.83M
  • Expense Ratio: 0.75%
  • AAR: 33.73%

3 Main Types of Commodity ETFs

There are various types of ETFs, such as a commodity pool ETF that lets investors combine their capital to access the commodity market. 

These are the three most popular commodity ETFs:

1. Physically Backed Funds 

Physically backed funds such as physical commodity ETFs actually own the underlying commodity.

By investing you take ownership in the fund’s stockpile of gold bullion, silver, palladium, or whichever physical commodity makes up the fund. Investors don’t have to worry about the logistics and storage of the commodity. 

2. Equity ETFs

Another way to invest in commodities is by investing in the companies that produce, transport, and store them. 

An equity based commodity ETF provides exposure to commodities through stocks of businesses involved in mining, transporting, and processing natural resources. 

Some investors prefer equity ETFs over futures based ETFs, which are often subjected to trading limits and regulatory restrictions. 

3. Futures Based Funds 

Futures based commodity funds provide exposure to commodities through the use of:

  • Futures contracts: This is a legal agreement to buy or sell a particular commodity asset at a predetermined price at a specified time in the future.
  • Forward contracts: These are non-standardized contracts that buy or sell the commodity at a specified future time at a predetermined price.   
  • Swaps: This is an agreement that a floating (market or spot) price, based on an underlying commodity, is traded for a fixed price over a specified period.

Funds that invest only in commodity futures need to trade many futures contracts to be profitable. This can result in the fund influencing prices on the futures market instead of simply tracking them as other funds do. 

For this reason, the Commodities Futures Trading Commission (CFTC) has implemented limits on commodity futures contracts.

How Can You Buy A Commodity ETF?

Unlike a mutual fund, which can be bought and sold for any amount set by the seller, ETF sales are based on the market price of the underlying assets. 

If you’re looking to invest in a commodity ETF, you can do so through a brokerage — in the same way, you’d purchase stocks.

Here’s how: 

  • A broker can provide you with an ETF database. 
  • Once you find the commodity ETF you’re interested in, read the prospectus and review the fund’s underlying assets. 
  • Then find the fund’s ticker symbol and place a purchase order through your broker.  (A ticker symbol is a code that represents the fund name. For example, the ticker symbol for Invesco DB MS Energy ETF is “DBE”.) 

Fortunately, as the liquidity of commodity ETFs is high, purchases and sales can be completed quickly. 

Advantages and Disadvantages of Commodity ETF Investments

Here are some of the pros and cons of investing in commodity ETFs. 


A commodity ETF can benefit your portfolio in several ways.

1. Portfolio Diversification 

When inflation pushes up the cost of living, the stock market usually suffers. Commodity ETFs can offer an inflation hedge that’s uncorrelated to the broader stock market. So it presents an opportunity to build a diversified portfolio

2. Commodity Futures May Experience A Possible Positive Roll Yield (Backwardation) 

Backwardation in the commodity futures market is beneficial to investors. 

It occurs when the futures contract price (the predetermined commodity price) is below the expected spot price (current commodity market price).

In this case, the futures price rises to meet that higher spot price.

This creates a positive roll yield, which can boost commodities funds. 


If you decide to invest in commodity ETFs, keep in mind that they also have some disadvantages like:

1. Possible Volatility

A commodity price can change suddenly and drastically due to unpredictable events like natural disasters and geopolitical conflicts. This can cause volatility in the commodities market. 

2. Risk of A Negative Roll Yield (Contango) on Commodity Futures

When the price of a commodity futures contract is higher than the spot price of the commodity, contango occurs. 

This creates an additional cost for ETFs holding futures as the fund manager needs to sell the current contract at a loss while buying the later dated one at a premium. This negative roll yield can shrink returns.

Are Commodity ETFs a Good Investment?  

Whether or not you invest in commodities ETFs depends on your personal investment model and risk appetite. 

For the private and institutional investor, high commission and management fees associated with regularly traded commodity ETFs can be a deterrent. 

Commodities ETFs can offer portfolio diversification but the potential for volatility and a negative yield is also high. 

Let’s look at another appealing alternative you can invest in during inflationary times. 

An Attractive Alternative Investment: Fine Art

If you’re looking to diversify your portfolio, alternative assets, such as contemporary art, are an investment option to consider . They have little correlation to stocks and bonds and typically still perform during periods of volatility.  

Over the years, contemporary art as an asset class has shown steady performance.

According to the Masterworks All Art Index, during times of high inflation: 

  • Contemporary art prices appreciated at a rate of 20.3%.
  • Over the last 26 years, contemporary art prices have outpaced the S&P 500 and other inflation hedges like gold. 

So, how can you tap into this lucrative asset class?

Invest In Shares Of Artworks Through Masterworks

Masterworks is an art investment platform that lets you invest in shares of multi-million dollar artworks by Banksy, Andy Warhol, KAWS, and more. 

Here’s how the Masterworks platform works: 

  • The research team identifies which artist markets have growth potential.
  • The acquisitions team then locates the piece and purchases it. 
  • They file an offering with the Securities and Exchange Commission (SEC) to securitize the artwork. 
  • After investing, all you have to do is wait. Masterworks can hold the painting for 3–10 years. If the piece is sold at a profit, you’ll receive pro rata returns after fees are subtracted.
  • Or, you can sell your shares on the secondary market.

Ready to get started with Masterworks? Complete a membership application today.

See important Reg A disclosures: Masterworks.com/cd

Masterworks is a fintech company democratizing the art market. Our investors are able to fractionally invest in $1mn+ works of art by some of the world's most famous and sought-after artists.