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.
The best commodity ETF by 1-year fund return as of 31/05/17
All commodity ETFs ranked by fund return
The largest commodity ETF by fund size in CHF
| 1 | iShares Diversified Commodity Swap UCITS ETF (DE) | 814 m | ||
| 2 | Lyxor Commodities Thomson Reuters/CoreCommodity CRB TR UCITS ETF C-EUR | 613 m | ||
| 3 | ETFS Longer Dated All Commodities GO UCITS ETF | 496 m |
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