eToro: Buy Shares with 0% Commission

Your capital is at risk

Best Commodity ETF UK – Compare Top ETFs 2021

Looking for a way to diversify your investment portfolio? Investing in commodities provides diversification and potentially great returns. Some of the Best Commodity ETFs UK invest in popular commodities like natural resources (crude oil and natural gas), precious and industrial metals (gold and silver), and agricultural goods.

In this guide, we review the best commodity ETF UK for 2021. We also give a step-by-step guide on investing in commodity ETFs through easy-to-use investing platforms without paying any commission!

Best Commodity ETF UK 2021 List

We bring you a list of the Best Commodity ETF UK to consider in 2021. You can scroll down to get a detailed review of each of these ETFs.

  1. iPath Bloomberg Commodity Index Total Return ETN– Overall Best Commodity ETF –Invest Now
  2. SPDR Gold ETF–Best Commodity ETF UK to invest in physical gold– Invest Now
  3. iShares Silver Trust ETF– Best Commodity ETF for tracking the price of silver– Invest Now
  4. Aberdeen Standard Physical Palladium Shares ETF– Best Commodity to invest in physical palladium
  5. United States Oil Fund– Best ETF to Access the West Texas Intermediate crude oil Benchmark
  6. United States Gasoline Fund– Best Commodity ETF to track gasoline prices
  7. The ProShares UltraShort Bloomberg Crude Oil– Best ETF to short-sell crude oil (Leveraged)
  8. SPDR S&P Oil & Gas Exploration & Production ETF– Best ETF to invest in oil and gas stocks
  9. Teucrium Corn Fund ETF– One of the Best ETFs to track corn price
  10. Teucrium Wheat Fund ETF– Best Commodity ETF to get exposure to wheat prices

Best Commodity ETFs UK Reviewed

When buying an ETF, you should consider several factors to ensure the ETF’s risks and rewards are in sync with your investment objective. You need to look at:

  • Factors that will impact the underlying commodity
  • The ETF’s exposure to derivatives like futures and swaps
  • The ETF annual fees and leverage
  • Its past performance to understand its efficiency to track the price of the underlying commodity.

Keeping these factors in mind, we review the Best Commodity ETF for UK investors in the market right now.

  1. iPath Bloomberg Commodity Index Total Return ETN – Overall Best Commodity ETF – Multi Asset

One of the best ways to reduce the volatility of commodity prices is through diversification. The iPath Bloomberg Commodity Index Total Return ETN provides that diversification. It invests in gold, natural gas, copper, silver, soybeans, WTI crude oil, corn, Brent crude, aluminum, and zinc. This ETN managed by Barclays tracks the performance of the Bloomberg Commodity Index Total Return Index. Note that ETNs are not ETFs. ETNs are debt instruments that give you payment upon redemption or maturity after deducting a fee.

While the diversification reduces the market risk of falling commodity prices, the iPath Bloomberg Commodity Index Total Return ETN bears the credit risk associated with the financial institution.

The ETN has recovered 42% in the last 12 months after falling 29% during the pandemic. As the economy recovers from the pandemic, the ETN’s performance is normalizing.

iPath Bloomberg best Commodity etf Index Total Return ETN Performance

The ETN has surged 7.6% in the first three months of 2021, but it is unlikely to replicate the 40% rally. The overall commodity market is in a long-term bear and that is reflected in the ETN’s price, which has been declining since 2008. However, you can use this ETN in the short term to hedge against inflation. You can buy this ETF on eToro without paying any commission. That will reduce your investing cost, leaving more income at your disposal.

67% of retail investor accounts lose money when trading CFDs with this provider.

  1. SPDR Gold ETF – Best Commodity ETFs to invest in physical gold

When thinking of investing in commodities, you cannot leave gold out. It is considered to be a safe haven. When the currency value falls, gold price rises as banks use gold reserves to print more money. Investors invest in gold to hedge their portfolios from a market crash. Historically, gold prices rose during the 2009-2011 period when the world recovered from the financial crisis. At that time, many banks went bust, and people found gold safer than currency.

Gold prices began rallying in 2020 as the road to recovery from the pandemic took off. Gold will rise when other stocks fall, thereby hedging your portfolio from a market crash.

Holding physical gold through bullion bars and coins is inconvenient. It has the risk of theft, lacks flexibility, and entails a storage cost. The SPDR Gold ETF takes care of all these hassles and gives you exposure to its gold vault for as little as just $50 – or about £35. It is the Best Commodity ETF for UK investors to invest in physical gold.

SPDR Gold ETF performance best commodity etf

The ETF moves alongside the gold price. It rallied 38% between March 20, 2020, and August 7, 2020, when the pandemic created panic and investors fled to their safe-haven gold. As things started to stabilize from August, the ETF fell 15% from its peak.

While many investors are touting another market crash after the fiscal stimulus ends, it is difficult to time the market. Having exposure to gold through this best Gold ETF will mitigate your downside risk if there is a crash.

67% of retail investor accounts lose money when trading CFDs with this provider.

  1. iShares Silver Trust ETF – Best Commodity ETF for tracking the price of silver 

In olden times when there was no paper currency, people used silver and gold as a means of exchange. Even today, they hold an intrinsic value, and people find comfort in investing in these metals when paper currency is at risk during an economic crisis. Silver is another monetary commodity less expensive than gold and is mainly used in industrial production.

The problems of holding physical silver bars and coins are the same as gold. Hence, the best way to invest in silver is through the iShares Silver Trust ETF. This ETF holds physical silver in its vaults in London and New York and has no complexities of futures contracts or other derivatives.

iShares Silver Trust ETF performance best commodity etf uk

Like all commodities, silver is in a long-term bear. It reached a peak in 2011 and has been declining since then. As the iShares Silver Trust ETF tracks the silver price, its performance was in sync with the silver price.

During the 2009 financial recovery (January 2009 to April 2011), the ETF rose almost fourfold. Since then, it has been declining, with some rallies in between. After 10 years, the ETF surged 68% from its March 2020 dip to its August 2020 peak as the pandemic created a 2009-like panic in the stock market.

The ETF is unlikely to see a pandemic-like rally anytime soon. But it deserves a place in your portfolio as a hedge against a market crash.

67% of retail investor accounts lose money when trading CFDs with this provider.

  1. Aberdeen Standard Physical Palladium Shares ETF – Best Commodity to invest in palladium

Apart from popular precious metals like gold and silver, there are some lesser know precious metals like palladium. Palladium is largely used in the automotive, chemical, electrical, jewellery and dental industries. Around 75% of palladium produced is used in automobile catalytic converters and has huge demand in the world’s largest auto markets – ­the U.S and China. However, 80% of palladium supply comes from Russia and South Africa. The geopolitical conditions and automotive market drive palladium price.

Most auto stocks are surging on the back of electric vehicle (EV) momentum, and that is driving palladium to new highs. It has become a metal more expensive than gold and has achieved the status of a monetary metal.

Aberdeen Standard Physical Palladium Shares ETF performance best commodity etf uk

The Aberdeen Standard Physical Palladium Shares ETF is one of the Best Commodity ETFs for UK investors. It allows you to invest in physical palladium cost-effectively and conveniently.

Palladium is not in a long-term bear, making it a lucrative investment. As the ETF tracks palladium price, it is in a long-term bull, rising almost 380% between June 2016 and March 2021. It saw a dip of almost 30% on March 9, 2020, but quickly recovered (up 45%) on March 23, 2020. This movement came as the pandemic-induced lockdown impacted automotive sales significantly.

The ETF has growth potential as the countries offer automotive industry subsidies to reduce CO2 emissions. This is driving EV sales, which will lead to higher demand for palladium. However, its biggest risk is lower trading volumes compared to gold and silver. Moreover, automakers are looking for an alternative to palladium. Until they work out the technology, palladium would enjoy a higher price, and investing in this metal will diversify your portfolio.

67% of retail investor accounts lose money when trading CFDs with this provider.

  1. United States Oil Fund – Best ETF to Access the West Texas Intermediate crude oil Benchmark

Unlike precious metals, oil has a high application value. It is used to make gasoline, jet fuel, and petroleum products like plastics, medicines, ink, cosmetics, fertilizer, and asphalt. You can’t just go and buy a barrel of oil but invest in oil through futures contracts. Like every commodity, demand and supply forces determine oil price. But the oil supply is partially controlled by OPEC.

Two main types of oil are Brent Crude, mainly found in Europe, and West Texas Intermediate (WTI), largely found in the U.S. These are used to make gasoline. The United States Oil Fund invests in oil futures to tracks WTI oil prices.

United States Oil Fund performance best commodity etf

In March 2020, when the pandemic halted world transportation, oil prices went negative as companies were paying to store oil. The OPEC asked its member countries to stop oil production to bring supply in line with demand. As the economy reopens, the oil price is rising. But demand from airlines, one of the biggest oil consumers, remains subdued amid international travel restrictions.

Hence, the United States Oil Fund surged 95% last year but is still below the pre-pandemic level. The ETF has the potential to grow as air travel demand returns and oil price rises. However, it is in a long-term bear as it did not recover from the 2009 financial crisis and the 2014 oil crisis. This ETF is a good short-term inflation hedge but not a long-term investment.

67% of retail investor accounts lose money when trading CFDs with this provider.

  1. United States Gasoline Fund – Best Commodity ETF to track gasoline prices 

If you want to get exposure to gasoline prices, the United States Gasoline Fund is the Best Commodity ETF UK. It invests in futures and swaps to track gasoline prices. It gives you exposure to the gasoline variant of oil, which depends on the performance of the travel and transport industry.

United States Gasoline Fund performance best etf commodity etf uk

After falling 65% in March 2020, the United States Gasoline Fund surged threefold, returning to its pre-pandemic level. The ETF is currently seeing a dip, creating a good buying opportunity. The gasoline price could rise as the US energy policy will reduce output, vaccine rollout will reopen the borders, and the pent-up demand for the holiday will boost travel. Any dip in crude oil and gas is a buying opportunity until the situation normalizes.

67% of retail investor accounts lose money when trading CFDs with this provider.

  1. The ProShares UltraShort Bloomberg Crude Oil – Best ETF to Short-Sell Crude Oil (Leveraged)

While investors are hopeful that oil and gasoline prices will rise, the International Energy Agency (IEA) stated that the oil market is not in a price rise cycle. This yin and yang situation of rising and falling can make you lose money. Hence, a good strategy would be to take both long and short positions in the oil. You can do so without having any knowledge of futures through the ProShares UltraShort Bloomberg Crude Oil ETF.

ProShares UltraShort Bloomberg Crude Oil performance best commodity etf uk

The ETF short sells oil, which means you will gain when the oil price falls. And the 2x leverage means if the ETF value fell by 5%, you will gain 10% and if the ETF value increased by 5%, you will lose 10%.

The ETF has declined 69% in the last year, which means investors gained around 140%. If you buy both the United States Oil Fund and ProShares UltraShort Bloomberg Crude Oil, you can balance the volatility risk.

67% of retail investor accounts lose money when trading CFDs with this provider.

  1. SPDR S&P Oil & Gas Exploration & Production ETF- Best ETF to invest in oil and gas stocks

One way of investing in commodities is through buying physical assets or futures. Another way is to buy companies that produce and sell these commodities. The SPDR S&P Oil & Gas Exploration & Production ETF invests in oil and gas stocks listed in the US. This best ETF UK is a bridge between stocks and commodities. It is not as volatile as oil price, but the ETF gains when the oil price rises. As it has exposure to mining companies, other factors also play a role in the ETF’s performance.

SPDR S&P Oil & Gas Exploration & Production ETF performance best commodity etf uk

The ETF surged 123% in the last one-year but fell around 35% in the last five years as the long-term bear nature of oil haunts the oil and gas stocks. This ETF is not a substitute for long-term investments but a good short-term investment in the current oil price rally.

67% of retail investor accounts lose money when trading CFDs with this provider.

  1. Teucrium Corn Fund ETF – One of the Best ETFs to track corn price

Till now, we discussed hard commodities like metals and oil that are mined or extracted from the earth and can be stored for decades.

Soft commodities are grown like food grains, livestock, and other agricultural products. They are perishable, which brings a higher risk of storage. Their demand continues to grow as the world population increases, but it is the supply where the risk is. Uncertainties like weather and pathogens can impact their supply.

Given the high risk of supply and storage, soft commodities are more volatile than hard commodities. Hence, the best way to get exposure to agricultural commodities is through ETFs. Corn is among the top three most widely produced agricultural commodities as it is used for human consumption, livestock feed, and ethanol production. One of the Best Commodity ETK UK for corn is the Teucrium Corn Fund ETF that has holdings in futures contracts diversified across multiple maturities.

Teucrium Corn Fund ETF performance

The Teucrium Corn Fund ETF has outperformed the broader stock market in the last 12 months, growing 36% compared to the FTSE 100 index that surged 20.7%. The growth comes on the back of demand from China, where heavy rains have significantly impacted corn production. Housing the world’s biggest population, any food shortage in China will boost exports and reduce the leftover inventory.

This is a good time to make some short-term gains from corn while the favorable supply-demand dynamics last. The Teucrium Corn Fund ETF has surged 11% in the first three months. It is trading above its 200-day moving average, hinting that bulls are in control. The ETF is likely to surge till the China effect lasts. However, the ETF is not a long-term play as it has been falling for the last eight years. You can buy this ETF on eToro without paying any broker commission.

67% of retail investor accounts lose money when trading CFDs with this provider.

  1. Teucrium Wheat Fund ETF– Best Commodity ETF to get exposure to wheat prices 

Wheat is the third most-produced soft commodity as it is a staple food in most countries. China and India are among the top two producers of wheat. During the pandemic, people took to baking while staying home. The consumption of staple food increased, driving the demand for wheat and creating a supply shortage. Stores started selling smaller packs of wheat flour.

Teucrium Wheat Fund best commodity ETF uk performance

The best way to get exposure to the rising wheat demand is the Teucrium Wheat Fund ETF. It has holdings in futures contracts diversified across multiple maturities. This best commodity ETF UK has surged 7.3% in the last 12 months, with several dips and upcycles. You can use its volatility to your advantage and make some short-term gains by buying the dips and selling the rally on eToro for zero commission.

67% of retail investor accounts lose money when trading CFDs with this provider.

Are Commodity ETFs a Good Investment?

Commodity prices rise when inflation rises. But the sluggish economic growth in the U.S. and Europe, and a decline in China’s economic growth kept inflation in major global economies below 2%.

Inflation reduces your real income from stocks but increases income from commodities. Hence, commodities are a good investment when stocks are down, inflation is rising, and the economy is in a recovery phase. The last time anybody made significant money in commodities was the 2009-2011 period when the economy recovered from the financial crisis.

The global economy is currently recovering from the pandemic crisis, because of which commodities are in an uptrend. After dipping in March 2020 because of a sudden decline in consumer demand, gold, silver, and oil prices are rising. Even agricultural commodity prices are rising because of the supply shortage in China. This recovery rally makes commodities attractive. But be wary, as the rally won’t last long, and commodities might return to their long-term downturn.

Best Commodity ETF UK Investment Platforms 2021

Once you have selected your commodity ETFs, it is time to select the right investing platform. High brokerage fees can significantly reduce your gains and aggravate your losses. When searching for the investing platform, look for commission, securities offered, minimum account balance, payment methods, regulatory compliance, and customer support.

We scanned various platforms and shortlisted the two of the best stock brokers and best investment apps to start investing in the best Commodity ETFs UK.

1. eToro – Best Broker to Invest in Commodity ETFs with 0% Commission

etoro

eToro is the first broker to introduce social trading, which integrates social media with fintech to brings innovative trading solutions. Founded in 2007, the platform offers over 2,000 different financial assets, including stocks, ETFs, cryptocurrencies, indices, currencies, and commodities. With eToro, you can trade on these securities directly, through leverage, and short and long positions for a 0% commission.

Broker Chart 1

67% of retail investor accounts lose money when trading CFDs with this provider.

Unique features of eToro

eToro aims to make trading accessible to all by offering various investment options for newbies. You can do your research and see the social feeds where more than 20 million registered users of eToro’s global community discuss their investment strategy. You can also choose your favorite eToro trader and copy his/her investment strategy. Every time your favorite trader makes a trade, eToro makes a similar trade on your portfolio, and you benefit from his/her research. You can also invest in one of the eToro portfolios based on investing themes like 5G and cloud.

If you are a beginner, eToro is a good platform to learn trading without having a finance background. You can learn on the field, take eToro club membership, and access a dedicated Customer Success Agent and educational content like webcasts, investment newsletters, and more. As far as ETFs are concerned, you can start with a minimum investment of $50. Broker Chart 2

You can deposit funds on eToro with your UK debit card, credit card, bank account, or e-wallet. As it is denominated in US dollars, it charges a 0.5% currency conversion fee. But this charge is offset by its commission-free service. The platform is regulated by the Financial Conduct Authority (FCA) and the Financial Services Compensation Scheme (FSCS), giving you regulatory protection.

Pros:

  • Ideal for beginners with its easy-to-use interface
  • Access to 2,400+ stocks and 250 ETFs for zero commission
  • Trade CFDs in the form of stocks, indices, commodities, forex, and more
  • Copy-trade expert traders
  • Invest in thematic portfolios that give exposure to future trends
  • Deposit funds with a debit/credit card, e-wallet, or UK bank account
  • FCA and FSCS protection

Cons:

  • Doesn’t offer interactive stock charts or fundamental data that advanced traders need for technical analysis
  • No ISAs or SIPPs

67% of retail investor accounts lose money when trading CFDs with this provider.

2. Capital.com – Top CFD Broker to Trade Commodity ETFs

Capital.comFCA-regulated Capital.com overcomes the cons of eToro and is well-suited for advanced traders who have experience in complex instruments like derivatives, margins, and spreads. It is a popular zero-commission CFD trading platform that allows you to long or short the Best Commodity ETF UK through CFD derivatives. Capital.com allows you to do margin trading with a leverage of up to 1:5. This means you put £100 and trade with up to £500.

Capital.com oil price table

Capital.com requires a minimum deposit of just £20. If you are a newbie, you can practice trading in the best Commodity ETFs for UK investors on its demo account facility without any money. When you are confident, you can trade by depositing funds through debit/credit cards and e-wallets.

Pros:

  • 0% Commission-free trading
  • Offers tight spreads, leverage, and options
  • Advanced charting and analysis interface
  • AI assistant spots weak points
  • Has a minimum deposit of £20

Cons:

  • Cannot build custom trading strategies
  • CFDs only

75.26% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider.

How to Buy the Best Commodity ETFs UK

It is time to act on your learning and create an online trading account in the UK. Here we will show you a four-step approach to start trading through the FCA-regulated broker eToro. All you need is a mobile phone with an internet connection.

Step 1: Opening a Trading Account

Opening an account with eToro is just like opening a social media profile. Go to the eToro website and click Join Now. The below page will open where you have to fill in basic personal details like name, email address, phone number. Select a username and password. The password should be 8-20 letters, with one upper case letter or symbol.

Etoro chart 1

67% of retail investor accounts lose money when trading CFDs with this provider.

After you register, eToro will also ask you to upload identity proof, preferably a photo of your passport or driver’s license, and address proof like a recently issued bank account statement or utility bill. You need to complete this verification process to comply with FCA guidelines. You can skip this portion for a later date if you are not depositing more than $2,250 or £1,600.

However, you will need to comply with the documentation to withdraw your money. Hence, you should complete this procedure as fast as possible. 

Step 2: Activating your account 

After creating your account, you need to deposit at least $1,000 or £726 to activate your account and start trading.

Etoro chart 2

You can deposit the money using your

  • Debit Card
  • Credit Card
  • Bank Transfer (which could take 2-3 days to process)
  • E-Wallet (Paypal, Skrill, and Neteller)

All payment options, except bank transfer, can get you activated instantly. Make sure the name on the eToro account matches with the name in your bank account.

Step 3: Select the Commodity ETF to Trade

After activating the account, go to the dashboard. On the left-hand side, click on the ‘Trade Markets’ button. There are various options on the top line. Click on ‘ETF’. It will take you to a list of all the ETFs that you can trade on eToro.

Etoro chart 3

67% of retail investor accounts lose money when trading CFDs with this provider.

If you already know which ETF to buy, just type the ETF name or ticker on the search eToro button at the top center. In the above example, we are searching for the SPDR Gold ETF.

Step 4: Place your Commodity ETF Trading Order 

Once you are on the ETF page, there is a B (Buy) and S (Sell) button Trade button. You will come to the Trade page, wherein it will hint at the minimum balance you need. Enter the amount that you wish to invest in the ‘amount’ box and click ‘Open Trade’.

Etoro chart 4

With this, you complete your ETF trade without paying any commission to eToro.

eToro – Invest in the Best Commodity ETFs with 0% Commission

In summary, commodities are an alternative and not a substitute to stocks and bonds. They are risky and significantly impacted by demand-supply and geopolitical events. Commodities are in a long-term bear, making them good short-term investments to hedge your portfolio against inflation.

As commodities are more volatile than other investments and need knowledge of derivatives, it is better to invest in a Commodity ETF. You can invest in any of the Top 10 Best Commodity ETFs that we discussed for short-term portfolio diversification. All 10 of them are available on the eToro platform commission-free.

etoro

67% of retail investor accounts lose money when trading CFDs with this provider.

FAQs

Are commodity ETFs a good investment?

How does a commodity ETF work?

Which is The Best Commodity ETF?

How do you get exposed to commodities?

Can a commodity ETF go to zero?

About Alan Draper PRO INVESTOR

Alan is the Chief Editor of the Buyshares sites and is responsible for ensuring all the content on our site is accurate, relevant and helpful. He is an experienced editor who has worked for several leading online publications. Alan is also a writer and is an expert on the stock market.

Read next