Best Commodity ETFs To Buy In 2023
Introduction
A commodity exchange-traded fund (ETF) is a means to invest in a variety of widely used resources, such as oil, gold, and silver, to profit from growing prices. Find out the top five commodity ETFs to buy right now in this guide. All you need to know about the top commodity exchange-traded funds and how to invest in them is covered on this page. Learn what a commodity ETF is, where to invest, and the top five choices available at the moment.
What Are The Top Commodity ETFs To Buy?
We have listed the top five commodity ETFs to buy based on the opinions of our analysts below. Together with its market ticker, the ETF’s complete name is available. Scroll down to find out more about each ETF’s inclusion on our list.
1. Invesco Optimum Yield Diversified Commodity Strategy No K-1 (NASDAQ: PDBC)
Invesco Optimum ETF, which is actively managed, is intended to outperform DBIQ Optimum Yield Diversified Commodities Index Excess Return. This index consists of futures contracts on 14 of the most actively traded commodities in the world, such as agricultural products, industrial metals, precious metals, and commodities utilised in the energy industry.
The size of this ETF is the primary factor in its inclusion on our list. With about $5 billion in assets under management, it is the biggest commodities ETF available. Its bulk shields it from volatility and makes commodity investing risk-free.
The Invesco ETF has had an especially strong recent run because to commodity prices rising sharply across the board in 2022. This is the foundation of a wise commodity investment since it gives you a chance to balance your portfolio against stock market volatility. The best ETF platforms to purchase this and other ETFs are listed further below this page.
2. Invesco DB Commodity Index Tracking Fund (NYSEARCA: DBC)
The DBC ETF is comparable to the PDBC ETF, but rather than outperforming it, it is intended to accurately track any changes to the same DBIQ Index, whether they are favourable or negative. DBC is designed to be a cheap and practical method of investing in commodities futures.
With just under $3 billion in assets under management, DBC is a sizable ETF like PDBC. Also, it monitors the same 14 commodity futures contract values.
The Invesco DB ETF’s market performance, which has seen significant increase in recent years, is the only meaningful difference between the two products. DBC’s ranking on our list was assured by the solid returns it has given to investors.
3. iShares U.S. ETF Trust iShares GSCI Commodity Dynamic Roll Strategy ETF (NASDAQ: COMT)
The S&P GSCI Dynamic Roll (USD) Total Return Index, which gauges the performance of futures contracts in the energy, metals, agriculture, and livestock sectors, is what the actively managed ETF COMT is designed to track.
COMT, a sizable ETF with over $2.5 billion in assets under management, has done reasonably well in the past year despite having struggled the five years prior.
The high asset mix of this fund and the low expense ratio of less than 0.5% are the main factors that put COMT on our list.
4. First Trust Global Tactical Commodity Strategy Fund (NASDAQ: FTGC)
FTGC is an actively managed ETF that offers investors exposure to commodities while pursuing total return and a comparatively steady risk profile. The fund is able to hold various commodity ETFs, but it doesn’t hold futures contracts directly; instead, a Cayman Islands-based subsidiary does.
Another fund that has experienced spectacular performance since the pandemic is FTGC, which has more than $2 billion in assets under management. Going into 2022, the economy was already on the rise, but Russia’s invasion on Ukraine drove it further higher and closer to all-time highs.
If you’re searching for a less dangerous approach to get exposure to commodities, the First Trust Global Tactical Commodity ETF might be a good choice. The fund’s success and low risk profile are crucial factors in its inclusion on this list.
5. iShares S&P GSCI Commodity-Indexed Trust (NYSEARCA: GSG)
GSG might be the best ETF for you if you’re seeking for a broad mix of commodities exposure. This ETF offers simple and adaptable access to the markets for energy, industrial and precious metals, food and animals, and agriculture. The fund is in charge of managing assets worth about $1.5 billion. As a result, it may also be regarded as an agricultural or energy ETF.
The GSCI fund has a lot of switching flexibility among several commodity sectors, which puts it in an excellent position to adjust to swiftly shifting international events. Early in 2022, as the cost of commodities like oil, natural gas, and nickel increased, GSCI shifted its strategy and invested more than half of its capital in energy commodities.
This kind of adaptability is what distinguishes GSCI as a wise investment, especially at a time when the outlook for all commodities is hazy. The flexibility to transfer funds from cash to futures contracts allows GSCI to take advantage of a swiftly evolving situation.
What Is A Commodity ETF?
An exchange-traded fund (ETF) that tracks the price performance of a number of commodities is called a commodity ETF. An exchange-traded fund (ETF) is a financial instrument that you can buy and sell on a stock exchange, whereas a commodity is a raw material or agricultural product that may be bought and sold. They are made to monitor the overall performance of a specific index or sector.
A commodity ETF can buy equities in businesses that are involved in a specific industry or it can be a fund that only tracks the price of an asset like oil or gold. An oil ETF, for instance, might invest in crude oil futures or companies like BP, Shell, and Exxon.
Are Commodity ETFs A Good Investment?
It largely depends on the particular commodity. Several economic situations will favour the performance of various commodities. For instance, industrial goods like fossil fuels thrive best when the economy is booming and infrastructure spending is high. In contrast, safe-haven assets like gold perform best when there is significant inflation and political turmoil.
You can shield your portfolio from the swings caused by holding just one commodity by investing in a commodity exchange-traded fund (ETF). The process of investing in an ETF is also relatively straightforward, in contrast to some of the more well-liked approaches to using commodities to generate returns.
If you decide to invest, it’s crucial to stay current with the news because geopolitical developments and international relations have a significant impact on commodity prices. The commodity markets may experience significant changes as a result of events like Russia’s invasion of Ukraine, thus these factors must be considered. See below for the latest recent news and commentary.
Conclusion
Choosing the best commodity ETFs to buy in 2023 requires careful analysis and consideration of market trends, individual financial goals, and risk tolerance. Investors can diversify their portfolios and gain exposure to various commodities through ETFs, but it is important to understand the underlying assets, fees, and performance history of each fund. Additionally, staying informed of global events and market shifts can help investors make informed decisions when it comes to buying and selling commodity ETFs. With the right research and strategy, commodity ETFs can be a valuable addition to any investment portfolio in 2023.
FAQ
What are commodity ETFs?
Commodity ETFs are exchange-traded funds that invest in physical commodities or commodity futures contracts. These funds provide investors with exposure to commodities such as gold, silver, oil, natural gas, agriculture products, and other raw materials.
Why should I invest in commodity ETFs?
Commodity ETFs provide diversification to a portfolio as commodities typically have a low correlation to traditional asset classes like stocks and bonds. Inflationary pressures can also have a positive impact on the value of commodity ETFs, making them a popular choice for investors looking to hedge against inflation.
How do I choose the best commodity ETFs to buy in 2023?
Investors should consider a few key factors when choosing the best commodity ETFs to buy in 2023, including the expense ratio, liquidity, underlying assets, and historical performance. It is also important to consider current market trends and global events that may impact commodity prices.
What are some popular commodity ETFs?
Popular commodity ETFs include SPDR Gold Shares (GLD), iShares Silver Trust (SLV), United States Oil Fund (USO), and Invesco DB Agriculture Fund (DBA). These funds provide exposure to gold, silver, oil, and agriculture products respectively.
Are commodity ETFs risky investments?
Like any investment, commodity ETFs come with inherent risks. Commodities can be volatile and subject to price swings, and there is always a risk of losing money. Investors should carefully consider their risk tolerance and investment objectives before investing in commodity ETFs. It is also important to conduct thorough research and seek the advice of a financial professional before making any investment decisions.
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