8 Best Commodity ETFs of March 2024 (2024)

While the Energy Select SPDR Fund does not hold commodities directly, it offers investors indirect exposure to energy via an allocation to the largest oil companies.

XLE’s portfolio owns 23 holdings. They’re a sampling of stocks in the energy sector of the S&P 500 Index. They give XLE a cross section of equities in the oil, gas and consumable fuel, energy equipment and services industries. They consist of such familiar names as integrated oil and gas giants Exxon Mobil (XOM) and Chevron (CVX) as well as oilfield services provider Schlumberger (SLB) and pipelines titan Kinder Morgan.

XLE is also the largest ETF on this list with over $38 billion in total net assets, while its expense ratio is extremely low at 0.10%, thus offering an inexpensive avenue into the energy sector.

Of course, last year’s energy crisis is an acute reminder of the world’s dependency on this commodity, but investors in XLE benefitted to the tune of a 64.29% 2022 return.

Abrdn’s Bloomberg All Commodity Longer Dated Strategy ETF tracks the total return version of the Bloomberg Commodity Index (BCOM).

BCOM aims to represent the entire commodities trading market. It consists of about two dozen different futures contracts.

In terms of industries, energy accounts for the largest allocation. Natural gas is the biggest segment of that. Other industry allocations include precious metals, agricultural products and livestock.

No single commodity may constitute less than 2% or more than 15% of the BCOM index, while no commodity sector may take up more than 33%. This allows BCD to offer investors well diversified exposure to the physical commodities market for a relatively cheap 0.3% expense ratio.

The U.S. Oil Fund LP offers investors exposure to oil using near-term WTI futures and rolling them over on a monthly basis.

Given the concentrated nature of the fund and the volatility of oil prices, USO carries a greater risk of volatility than many other ETFs. Its total returns in 2021 and 2022 were about 64% and 29%. But in 2020 it lost about 68%.

USO is also the only ETF on this list to have not generated a positive average annual return over the last five years.

USO offers liquidity, trading 3.7 million shares daily on average over the past three months.

The Invesco DB Commodity Index Tracking Fund offers exposure to a wide range of commodities across the energy, metals and agricultural sectors.

This ETF is rebalanced and reconstituted annually in November.The Fund caters to investors who want a cost-effective and convenient way to invest in commodity futures. DBC’s index holds futures contracts on 14 of the most heavily traded and important physical commodities in the world. So, DBC shareholders get exposure to such assets as gasoline, West Texas intermediate (WTI) crude oil, Brent crude, New York Harbor ultra-low sulfur diesel, gold, sugar, soybeans, copper, corn, wheat and aluminum.

In this way, DBC offers diversification and broad exposure across the commodities spectrum, and it comes with a lower risk profile than many other commodity ETFs. Yet despite its diversification, DBC’s five-year average annual return tops its Morningstar commodities broad basket peer group’s average.

Launched in 2007, Invesco’s DB Agriculture Fund is one of the older ETFs in the agriculture space. With roughly 388000 shares of average daily trading volume over the past three months, DBA offers decent liquidity in this space.

In descending order of weight, DBA currently holds futures in sugar, cocoa, live cattle, soybeans, coffee, corn, lean hogs, wheat, feeder cattle and cotton.

With an average annual return of roughly 5% over the past five years, DBA trails some of this list’s other sector ETFs. But for investors looking to allocate to agriculture without the inconvenience of buying their own futures, DBA is a good option at a reasonable fee.