The best commodity ETFs

How do I invest in a broad commodities basket?

Investing in commodities is considered risky. However, from a diversification perspective it can be interesting to invest in commodities. Especially, the historically negative correlation of commodities to stocks can improve portfolio diversification. A commodities investment is generally realised through an investment in forward or futures contracts. Commodity indices usually track a basket commodities.

There are several indices available to invest with ETFs in a broad basket of commodities. There are also subindices on single or selected commodity segments, which are usually derived from the indices mentioned. This Investment Guide will help you navigate between the peculiarities of commodity indices that vary substantially in their methodologies and ETFs that track them. It will allow you to find the most suitable ETFs for you by ranking them according to your preferences.

0.30% p.a. - 0.70% p.a.
annual total expense ratio (TER) of commodity ETFs
on commodities, which is tracked by ETFs
on commodities
The best indices for commodity ETFs

The best commodity ETF by 1-year fund return as of 31/07/17

All commodity ETFs ranked by fund return

 

The largest commodity ETF by fund size in CHF

All commodity ETFs ranked by fund size

 

The cheapest commodity ETF by total expense ratio

All commodity ETFs ranked by total expense ratio

 
 

Commodity indices compared

Diversification of the most important commodity indices

 

Source: justETF Research; Strategic weights of the single commodity segments or [1] current weights as of 31/01/2017

 

Methodologies of the most important commodity indices

Bloomberg Commodity Commerzbank Commodity ex-Agriculture EW Rogers International Commodity (RICI)
Number of ETFs 2 ETFs 1 ETF 1 ETF
Number of commodities 20 12 37
Index review annually semi-annually annually
Selection critieria Economic significance (production), diversification, continuity and liquidity Liquidity and importance Global consumption and liquidity
Index weighting 1/3 production
2/3 liquidity
Equal weight Global consumption (reviewed by the RICI committee)
Cap on single commodity 15% 8.33% -
Cap on commodities segment 33% - -
 
S&P GSCI© Energy & Metals Capped Commodity 35/20 Thomson Reuters/ CoreCommodity CRB UBS Bloomberg CMCI
Number of ETFs 1 ETF 1 ETF 1 ETF
Number of commodities 13 19 27
Index review annually monthly monthly
Selection criteria Global production (last 5 years) Liquidity and importance (reviewed by a committee) Fundamental factors and liquidity
Index weighting Global production Grupped by liquidity and equally weighted in four groups 2/3 fundamental factors
1/3 liquidity
Cap on single commodity 35% largest commodity
20% all others
- 35% largest commodity
20% all others
Cap on commodities segment - - -

Source: justETF Research; As of 31/01/2017