Exchange traded funds (ETFs) are uniquely structured investments that track indexes, baskets of assets or commodities. Since the first ETF was launched 20 years ago, the ETF industry has grown into a trillion-dollar business. This growth is due in part to the relative ease with which ETFs can be bought and sold, the ability to sell short and purchase ETFs on margin and the exposure that ETFs provide to commodities - as asset class that not long ago was impractical for individual investors because of the inconvenience and costs associated with transporting, storing and insuring the various commodities. Today's investors and traders can gain exposure to commodities through a growing number of exchange traded funds. Here are the top 10 most affordable commodity ETFs (in terms of expense ratio) for agricultural, diversified, industrial metals, oil and gas and precious metals ETFs.
Agricultural Commodity ETFs
Agricultural commodity products include grains and oilseeds, livestock, dairy, forest and the softs - cocoa, coffee, cotton and sugar. Of the 10 ag ETFs with the lowest expense ratio (shown below), the Dow Jones-UBS Coffee ETN (JO) stands out for its volume with a three-month average of 108,003. Launched on June 24, 2008, the fund invests in a single coffee futures contract, which is continuously rolled-over.
|FUD||E-TRACS UBS Bloomberg CMCI Food ETN||Food||0.65%|
|UAG||E-TRACS UBS Bloomberg CMCI Agric ETN||Broad||0.65%|
|LSTK||Pure Beta Livestock ETN||Broad||0.75%|
|JJS||DJ-UBS Softs Total Return Sub-Index ETN||Broad||0.75%|
|JO||DJ-UBS Coffee ETN||Coffee||0.75%|
|NIB||DJ-UBS Cocoa Total Return Sub-Index ETN||Cocoa||0.75%|
|SGAR||Pure Beta Sugar ETN||Sugar||0.75%|
|WEET||Pure Beta Grains ETN||Grains||0.75%|
|SGG||DJ-UBS Sugar Sub-Index Total Return ETN||Sugar||0.75%|
The top 10 agricultural ETFs with the lowest expense ratios .
Diversified Commodity ETFs
The funds in this category invest in a variety of commodities. In terms of volume, Rogers Intl Commodity ETN (RJI) beats out the competition with an average three-month volume of 449,421. RJI, which was launched on July 31, 1998, represents the value of 36 commodity futures contracts, including agricultural, energy and metals products. The Dow-Jones UBS Commodity Index (DJP) and the S&P GSCI Total Return Index (GSP) both trade under considerable volume as well with average three-month volumes of 311,067 and 215,057, respectively.
|DJCI||DJ-UBS Commodity Index Total Return ETN||Broad||0.50%|
|BNPC||Stream S&P Dynamic Roll Global Commodities Fund||Broad||0.65%|
|UCI||E-TRACS UBS Bloomberg CMCI ETN||Broad||0.65%|
|BLND||DJ-UBS Commodity Index 2-4-6 Blended Futures ETN||Broad||0.70%|
|GSP||S&P GSCI Total Return Index ETN||Broad||0.75%|
|RJI||Rogers Intl Commodity ETN||Broad||0.75%|
|SBV||Pure Beta S&P GSCI-Weighted ETN||Broad||0.75%|
|GSG||GSCI Commodity-Indexed Trust Fund||Broad||0.75%|
|DJP||DJ-UBS Commodity Index TR ETN||Broad||0.75%|
|BCM||Pure Beta Broad Commodity ETN||Broad||0.75%|
The top 10 diversified commodity ETFs with the lowest expense ratios.
Industrial Metals ETFs
Industrial metals include copper, lead, zinc, tin, aluminum, nickel, cobalt, molybdenum and recycled steel. We have listed the top 10 funds having the lowest expense ratios. Most of these ETFs trade under somewhat low volume, with the exception of the Rogers Intl Commodity Metal ETN (RJZ) which has an average three-month volume of 24,372. Launched on Oct. 17, 2007, the fund attempts to track the performance of the Rogers International Commodity Index - Metals Total Return Index. The Index represents the value of a basket of 10 metals commodity futures contracts.
|CPER||United States Copper Index Fund||Copper||0.65%|
|UBM||E-TRACS UBS Bloomberg CMCI Ind Metal ETN||Broad||0.65%|
|USMI||United States Metals Index Fund||Broad||0 .70%|
|LD||DJ-UBS Lead Total Return Sub-Index||Lead||0.75%|
|JJU||DJ-UBS Aluminum total Return Sub-Index ETN||Aluminum||0.75%|
|LEDD||Pure Beta Lead ETN||Lead||0.75%|
|RJZ||Rogers Intl Commodity Metal ETN||Broad||0.75%|
|JJT||DJ-UBS Tin Total Return Sub-Index ETN||Tin||0.75%|
|NINI||Pure Beta Nickel ETN||Nickel||0.75%|
|JJN||DJ-UBS Nickel Total Return Sub-Index ETN||Nickel||0.75%|
The top 10 industrial metals ETFs with the lowest expense ratios.
The oil and gas ETFs are comprised of a variety of funds that invest in energy products such as oil, gas and natural gas. Of the commodity ETFs, the oil and gas ETFs are some of the most heavily traded. The United States Natural Gas Fund (UNG) leads the pack with an average three-month volume of more than 7.8 million. Launched on April 18, 2007, UNG invests in natural gas futures contracts . The United States Oil Fund (USO) also trades under high volume, with more than 5.8 million in average three-month volume. USO, which was launched on April 10, 2006, tracks changes in the price of light and sweet crude-oil-holding futures contracts in WTI Crude.
|USO||United States Oil Fund||Crude Oil||0.45%|
|UGA||United States Gasoline Fund LP||Gasoline||0.60%|
|UHN||United States Diesel Heating Oil Fund||Heating Oil||0.60%|
|UNG||United States Natural Gas Fund LP||Natural Gas||0.60%|
|USL||United States 12 Month Oil||Crude Oil||0.60%|
|UBN||E-TRACS UBS Bloomberg CMCI Energy ETN||Broad||0.65%|
|ONG||Pure Beta Energy ETN||Broad||0.75%|
|RJN||Rogers Intl Commodity Energy ETN||Broad||0.75%|
|UNL||United States 12 Month Natural Gas Fund||Natural Gas||0.75%|
|OLO||DB Crude Oil Long ETN||Crude Oil||0.75%|
The top 10 gas and oil ETFs with the lowest expense ratios.
Precious Metal ETFs
The precious metal ETFs include those that invest in physical commodities and futures contracts for gold, silver, platinum and palladium. Like oil and gas ETFs, the precious metals ETFs trade under significant volume. Of the 10 we have listed below that have the lowest expense ratios, the Silver Trust (SLV) has an impressive average three-month volume of more than 11 million. With an inception date of April 21, 2006, SLV is designed to track the spot price of silver bullion, holding 100% physical silver bullion. The SPDR Gold Trust (GLD) also trades under high volume, with an average three-month volume of nearly 10 million. Launched on Nov. 18, 2004, GLD invests in physical gold bullion .
|IAU||COMEX Gold Trust||Gold||0.25%|
|UBG||E-TRACS UBS Bloomberg CMCI Gold ETN||Gold||0.30%|
|SIVR||Physical Silver Shares||Silver||0.30%|
|SGOL||Physical Swiss Gold Shares||Gold||0.39%|
|AGOL||Physical Asian Gold Shares||Gold||0.39%|
|USV||E-TRACS UBS Bloomberg CMCI Silver ETN||Silver||0.40%|
|GLD||SPDR Gold Trust||Gold||0.40%|
|PPLT||Physical Platinum Shares||Platinum||0.60%|
|GLTR||Physical Precious Metal Basket Shares||Broad||0.60%|
The top 10 precious metals ETFs with the lowest expense ratios.
The Bottom Line
While these ETFs are ranked based on expense ratio, other factors must be considered when determining the affordability or suitability of any exchange traded funds. As with any investment, it is important to perform appropriate research prior to making any investment decisions.