Exchange traded funds have made it easier to invest in commodities and allowed individuals to branch out beyond traditional segments such as stocks and bonds.
Although gold ETFs have attracted the most headlines recently amid the precious metal’s record-breaking rally, investors can also use ETFs to track other commodities such as oil, grains and livestock.
For example, the year-to-date performance of other commodities have also shown robust gains, with silver gaining 31%, corn 13%, coffee 10%, heating oil 13% and gasoline 18%, reports Myra P. Saefong for MarketWatch.
ETF investors may take a look at the following ETFs that cover these commodities:
- ETFS Physical Silver Shares (NYSEArca: SIVR)
- iPath Dow Jones-UBS Coffee ETN (NYSEArca: JO)
- Teucrium Corn Fund (NYSEArca: CORN)
- U.S. Gasoline Fund (NYSEArca: UGA)
- U.S. Heating Oil fund (NYSEArca: UHN)
“After all, no matter what happens to paper markets, physical commodities will still be in demand,” commented Jason Schenker, president and chief economist at Prestige Economics LLC. “Industrial metals, precious metals, and energy commodities are all real assets that are consumed.”
“They are also much more homogeneous and fungible than other specific investments of a given financial asset class. As such, they are all a bit safer in the long run,” Schenker added in the MarketWatch report.
The “safer” commodities will be those with day-to-day demand, like food, and those that can not be easily flooded into the market to meet rising demand, including coffee, cocoa and metals with restricted supply, said Christopher Ecclestone, a strategist at Hallgarten & Company LLC.
“People still need to eat, use metals and burn fuel no matter how bad the economy gets,” said Sam Kirtley, chief executive officer of SK Options Trading.
However, commodities like copper, iron ore, coal, lead, zinc and nickel may be “particularly vulnerable to a slowdown or double dip,” remarked Evan Smith, co-manager of the U.S. Global Investors Global Resources Fund.
For more information on commodities, visit our commodities ETF category.
Max Chen contributed to this article.