Commodity ETFs are exchange-traded funds that invest in commodities futures, own physical commodities or buy the stocks of companies that produce commodities.
Some commodity ETFs buy and sell physical commodities, like the Abrdn Physical Palladium Shares ETF (PALL), which stores palladium bars in a J.P. Morgan vault.
Many commodity ETFs own the stocks of companies that produce, transport or trade commodities. Examples include the VenEck Gold Miners ETF (GDX), which tracks the performance of gold mining companies.
Some funds trade commodity futures, which are agreements to buy or sell a product at a future date and price. These funds aim to track price changes in an underlying commodity without owning either physical products or shares of stock.
The latter approach lets a single fund track a range of different commodities, like Abrdn’s Bloomberg All Commodity Longer Dated Strategy ETF (BCD). This fund is based on the Bloomberg Commodity Index (BCOM), which follows the entire commodities futures market.