The bull market for commodity equities may be over in the minds of some, while others feel another big leg is right around the corner. Whether you are on the bullish or bearish side of the argument, it is important to know what commodity equity ETFs are available.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Most investors are familiar with the SPDR Gold ETF (ARCA:GLD) and related ETFs that track the price of the commodity metal futures. Before the introduction of commodity ETFs, the option for investors was either buying the actual metal commodity, futures contracts or commodity related stocks. Most opted for the last option, because it was the most convenient and least expensive.

Metal Commodity Stocks
The choices in the world of metal commodity-related stocks are large and diverse and can be overwhelming for the average investor. This is just one reason ETFs have become so popular to individual investors who do not have the time or expertise to pick single stocks.

Gold: The Market Vectors Gold Miners ETF (ARCA:GDX) has over $8 billion in assets under management and has become the top gold mining ETF in the industry. The ETF is composed of 31 gold mining stocks with 63% of them headquartered in Canada. The U.S. makes up 15% and South Africa 13%. The ETF charges an expense ratio of 0.53%.

Since the beginning of 2008 the ETF has lost 12.8% of its value versus a gain of 81% for GLD. The miners have clearly lagged the metal they extract from the ground. If that divergence closes in the future, the performance of GDX should begin to catch up to GLD and will outperform the price of the underlying metal.

SEE: The 5 Best Performing Gold ETFs

Silver: The Global X Silver Miners (ARCA:SIL) is a basket of 31 silver mining companies with 44% in Canada, 14% in Mexico and 12% in the U.K. The fund charges an expense ratio of 0.65%. Since the end of April 2010, the ETF is up 42% versus a gain of 67% for the iShares Silver ETF (ARCA:SLV) that tracks the price of the spot price of silver. (SIL began trading in April 2010.)

Copper: The Global X Copper Miners ETF (ARCA:COPX) also began trading in April 2010 and is down 2.5% since the end of its first month. The iPath Copper ETN (ARCA:JJC) is up 2.6% in the same timeframe. The basket of 34 copper mining stocks charges an expense ratio of 0.65% and is also heavily invested in Canada (47%) and the U.K. (14%).

Aluminum: The Global X Aluminum ETF (ARCA:ALUM), which began trading Jan. 4, 2011, has fallen 34% since its inception. The iPath Aluminum ETN (NYSE:JJU) is down 24% during the same time. A total of 22 stocks are in the ETF that charges investors an expense ratio of 0.69%. The U.S. accounts for 25% of the ETF with the U.K. at 18%.

SEE: How To Pick The Best ETF

The "Right" Metal Commodity ETF
I cannot say there is a "best" metal commodity ETF for all investors. It all depends on what the goal is and the risk tolerance, as well as where the overall metals sector is at the point an investor is looking to initiate a new position.

One final option for investors could be a diverse mining ETF, such as the SPDR Metal & Mining ETF (ARCA:XME). The ETF is composed of 43 mining related stocks that are heavily invested in steel (33%), coal (16%), and precious metals (16%). With an expense ratio of 0.35% it is a cheap options for investors. Since the end of April 2010, the ETF is down 14% lagging both silver and copper. This is due to the large exposure to steel stocks.

The Bottom Line
Unfortunately there is no clear-cut winner in the world of metal commodity ETFs, it all depends on timing and the individual investor.

SEE: An Inside Look At ETF Construction

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Matthew McCall did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  2. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  3. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  4. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  5. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  6. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  7. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  8. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
  9. Stock Analysis

    Why Alphabet is the Best of the 'FANGs' for 2016

    Alphabet just impressed the street, but is it the best FANG stock?
  10. Investing News

    A 2016 Outlook: What January 2009 Can Teach Us

    January 2009 and January 2016 were similar from an investment standpoint, but from a forward-looking perspective, they were very different.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center