As a result, most commodity stocks and commodity exchange-traded funds (ETFs) have been on a fairly profitable streak for most of the past 12 months. Forbes Advisor has thoroughly analysed this corner of the market and has selected eight of the best commodity ETFs available today. While commodities offer an attractive diversification of benefits, reducing portfolio volatility and hedging inflation, investing in them can be difficult. This means that adding commodities to a portfolio can reduce overall volatility and risk and also provide diversification.
When it comes to investing in commodities, ETFs are the best option for regular investors, as it's best to let professionals deal with the commodities listed on the futures market. The S%26P GSCI is an important benchmark index for the global commodity market, which tracks the futures of all major commodity sectors, including energy products, industrial metals, agricultural products, livestock and precious metals. Instead, they invest in commodity futures and, as the name suggests, these are contracts that eventually expire at a fixed time in the future. The index tracks the futures market for a wide range of physical commodities and seeks to represent the entire commodity trading market.
All of these funds are compared to physical commodity markets and offer a simple and unique way to invest in your regular brokerage account. The ETF has been consistently in the top quartile of its Morningstar category for the past five years. Professionals see it as a lower risk option compared to Invesco DB Oil, thanks to a wider selection of raw materials in addition to crude oil. The fund invests in commodity futures contracts for WTI crude oil, Brent crude oil, natural gas, gasoline, heating fuel, zinc, copper, aluminum, gold, silver, corn, sugar, soybeans and wheat.
With its simplified documentation and a portfolio comprised of futures contracts on 14 highly traded commodities in the energy, precious metals, industrial metals and agriculture sectors, it's no surprise that the PDBC is one of the most popular commodity ETFs on Wall Street. This is a subtle but important difference, which has helped it deliver one of the best results of all the commodity ETFs on this list, as stocks have risen more than 21% so far this year. Most participants in the futures markets are producers or consumers of commodities who trade futures to maximize the value of their assets and reduce the risk of price volatility. It allows ordinary people to easily expose themselves to this important energy product and, in a year in which oil prices have remained high, USO has registered an impressive increase of 17% since January.