Home > Glossary > Commodity etf

Commodity ETF

A Commodity ETF (Exchange-Traded Fund) is a type of investment fund that tracks the price movements of a specific commodity, such as gold, oil, or natural gas, or a basket of commodities. Commodity ETFs allow investors to gain exposure to commodity markets without directly owning the physical goods. These ETFs can be structured in different ways, including those that hold the actual commodity, invest in futures contracts, or own shares of companies involved in the production or extraction of the commodity.

Example

An investor might buy shares in a gold ETF that tracks the price of gold, providing exposure to the precious metal without having to store or own physical gold.

Key points

• A Commodity ETF tracks the price of a commodity or basket of commodities, allowing investors to gain exposure without directly owning the physical asset.

• Some commodity ETFs hold the actual commodity, while others invest in futures contracts or related companies.

• Provides an easy way for investors to diversify into commodity markets.

Quick Answers to Curious Questions

They track the price of a commodity or basket of commodities by holding physical assets, investing in futures contracts, or owning shares in companies related to the commodity.

Commodity ETFs provide easy access to commodity markets, allowing investors to gain exposure to raw materials like gold, oil, or agricultural products without directly owning them.

Yes, some Commodity ETFs hold the physical commodity (like gold or silver), while others invest in futures contracts or companies involved in producing the commodity.