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.

0.19% p.a. - 0.55% 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 30/04/17

All commodity ETFs ranked by fund return

 

The largest commodity ETF by fund size in GBP

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 0 ETFs 0 ETFs
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 0 ETFs 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

 

Performance of the commodity indices in comparison

 

Bloomberg Commodity Index

The Bloomberg Commodity Index (previously: Dow Jones UBS Commodity Index) is based on the economic significance of the commodities. Besides diversification, continuity and market liquidity are also considered when weighting the index components. Currently, the Bloomberg Commodity index tracks 20 commodities from the energy, precious metals, industrial metals, livestock and agriculture segments.

 

Methodology of the Bloomberg Commodity Factsheet Methodology

  • Broad commodities basket of 20 components
  • Commodities are selected by economic significance (production), diversification, continuity and market liquidity
  • Annual index review and rebalancing
  • Monthly roll period
  • Single commodity is capped at 15%
  • Commodities segment is capped at 33%
  • The index was introduced on the 14/07/1998

Further subindices

Bloomberg Commodity (EUR Hedged)
Bloomberg Commodity 3 Month Forward

 

Deutsche Bank Liquid Commodity Optimum Yield (DBLCI-OY) Balanced Index

The Deutsche Bank Liquid Commodity Optimum Yield (DBLCI-OY) Balanced Index tracks 14 commodities from the energy, industrial metals, precious metals and agriculture segments. The index seeks to optimise the roll yield.

 

Methodology of the Deutsche Bank Liquid Commodity Optimum Yield (DBLCI-OY) Balanced Factsheet Methodology

  • Commodities basket of 14 components
  • The index seeks to optimise the roll yield
  • Annual index review and rebalancing
  • Monthly roll period
  • Energy segment is capped at 35%
  • The index was introduced on the 03/09/1997

Further subindices

Deutsche Bank Liquid Commodity Optimum Yield (DBLCI-OY) Balanced (EUR Hedged)

 

Thomson Reuters/CoreCommodity CRB Index

The Thomson Reuters/CoreCommodity CRB Index is a broad commodities index that tracks 19 commodities. Dependent on their liquidity, the commodities are segmented into four groups, in which they are weighted equally. The first group contains pretroleum products and is capped at 33%. The second group contains seven highly liquid commodities and is capped at 42%. The third group contains four liquid commodities capped at 20% and the last group is capped at 5%.

 

Methodology of the Thomson Reuters/CoreCommodity CRB Factsheet Methodology

  • Commodities basket of 19 components
  • Commodities are selected by liquidity, global economic significance, correlations of commodity sectors and their contribution to strategic asset allocation
  • Annual index review
  • Index weight is rebalanced on a monthly basis
  • Monthly roll period
  • The index was introduced on the 03/01/1994

Further subindices

Thomson Reuters/CoreCommodity CRB Non-Energy
Thomson Reuters/CoreCommodity CRB Non-Agriculture and Livestock

 

UBS Bloomberg CMCI Index

The UBS Bloomberg CMCI Index tracks 27 commodities representing five broad sectors including energy, precious metals, base metals, agriculture and livestock. The index diversifies its futures across the maturity curve and thus offers constant maturities. Therewith, the index tries to minimise the risk of a negative roll yield.

 

Methodology of the UBS Bloomberg CMCI Factsheet Methodology

  • Broad commodities basket of 27 components
  • Commodities are selected by economic indicators like CPI, PPI, and GDP. Secondary factor is market liquidity.
  • Largest commodity is capped at 35% and all other commodities are capped at 20%
  • Constant maturity to reduce the negative roll yield
  • Index is rebalanced on a monthly basis
  • Daily roll period
  • The index was introduced in 2007

Further subindices

UBS Bloomberg CMCI (EUR Hedged)
UBS Bloomberg CMCI Ex Agriculture Ex Livestock Capped
UBS Bloomberg CMCI Ex Agriculture Ex Livestock Capped (EUR Hedged)

 
 

Commodity ETFs in comparison

The most important factors at a glance

When choosing a commodity ETF one should consider several other factors in addition to the methodology of the underlying index and performance of an ETF. For better comparison, you will find a list of all commodity ETFs with details on size, cost, age, income, domicile and replication method ranked by fund size.

Compare all commodity ETFs in detail
Compare all commodity ETFs in a chart

Provider
ISIN
  Fund size
in m GBP
TER
in %
Use of profits Fund domicile Replication method
Source Bloomberg Commodity UCITS ETF AIE00BD6FTQ80 1,014 0.19% p.a. Accumulating Ireland Unfunded swap
iShares Diversified Commodity Swap UCITS ETF (DE)DE000A0H0728 690 0.46% p.a. Accumulating Germany Funded swap
ETFS Longer Dated All Commodities GO UCITS ETFIE00B4WPHX27 420 0.30% p.a. Accumulating Ireland Unfunded swap
UBS ETF (IE) CMCI Composite SF UCITS ETF (USD) A-accIE00B53H0131 324 0.37% p.a. Accumulating Ireland Swap-based
Lyxor Commodities Thomson Reuters/CoreCommodity CRB TR UCITS ETF C-USDFR0010318998 124 0.35% p.a. Accumulating France Unfunded swap
db x-trackers DBLCI OY Balanced UCITS ETF 2C (USD)LU0460391732 56 0.55% p.a. Accumulating Luxembourg Unfunded swap

Source: justETF.com; As of 23/05/17

 

Return comparison of all commodity ETFs

The table shows the returns of all commodity ETFs in comparison. All return figures are including dividends as of month end. Besides the return the reference date on which you conduct the comparison is important. In order to find the best ETFs, you can also perform a chart comparison.

ETF   1 month
in %
3 months
in %
6 months
in %
1 year
in %
3 years
in %
UBS ETF (IE) CMCI Composite SF UCITS ETF (USD) A-acc -5.74% -7.32% -5.87% 16.56% -16.09%
db x-trackers DBLCI OY Balanced UCITS ETF 2C (USD) -5.79% -7.15% -7.64% 14.47% -16.39%
ETFS Longer Dated All Commodities GO UCITS ETF -4.92% -5.93% -7.00% 13.21% -15.30%
iShares Diversified Commodity Swap UCITS ETF (DE) -4.89% -5.82% -7.95% 11.32% -21.83%
Lyxor Commodities Thomson Reuters/CoreCommodity CRB TR UCITS ETF C-USD -5.69% -8.17% -9.97% 10.81% -24.84%
Source Bloomberg Commodity UCITS ETF A -5.19% -6.61% - - -
ETF   2017
in %
2016
in %
2015
in %
2014
in %
2013
in %
ETFS Longer Dated All Commodities GO UCITS ETF -7.16% 35.34% -19.96% -10.65% -11.58%
UBS ETF (IE) CMCI Composite SF UCITS ETF (USD) A-acc -7.71% 39.03% -21.13% -14.66% -9.82%
db x-trackers DBLCI OY Balanced UCITS ETF 2C (USD) -7.94% 39.38% -20.70% -16.30% -14.98%
iShares Diversified Commodity Swap UCITS ETF (DE) -8.31% 33.61% -23.26% -12.67% -10.65%
Lyxor Commodities Thomson Reuters/CoreCommodity CRB TR UCITS ETF C-USD -10.22% 31.06% -19.97% -13.55% -7.79%
Source Bloomberg Commodity UCITS ETF A - - - - -

Source: justETF.com; As of 30/04/17; Calculations in GBP including dividends