Back to the ETFs Directory

ETF Asset Class: Commodity

ETFs, or exchange-traded funds, are a type of investment vehicle that allows investors to trade a basket of assets on a stock exchange. ETFs typically track an index or sector, but they can also be used to invest in a specific asset class, such as commodities. Commodity ETFs offer exposure to the prices of various raw materials, such as metals, energy, and agriculture. They can be used to hedge against inflation or as a speculation on future commodity prices. Some ETFs track a physical commodity, such as gold or oil, while others track a commodity futures index. ETFs provide a convenient and liquid way to invest in commodities, but they come with some risks. For example, ETFs that track physical commodities may be subject to storage costs, and ETFs that track futures may be subject to rollover costs. ETFs that use leverage can also magnify losses. Before investing in a commodity ETF, be sure to understand the risks and costs involved.