Should you invest in a commodity ETF?

Updated on 3 August 2026

Investing in a commodity ETF makes sense mainly as a short-term diversification tool, not as a core portfolio holding: these products are in fact ETCs (debt securities), they are speculative, and their performance can drift away from the spot price of the commodity they track.

Key takeaways

• It usually gains its exposure through futures contracts on the commodity it tracks (roll-over), except for gold and silver, which are held physically.
• Management fees are low, between 0.12% and 0.46% per year depending on the fund (see the table below).
• Its performance can diverge sharply from the spot price, depending on whether the futures market is in contango or in backwardation.
• Among the main ETCs on the euro market, only the iShares Diversified Commodity Swap UCITS ETF is eligible for the PEA (a French tax-advantaged equity savings account).
• Suited to a short-term diversification allocation or to investors with a high risk tolerance, rather than to long-term holding.

What is a commodity ETF?

A commodity ETF is in fact an ETC (Exchange Traded Commodity), a debt security that tracks the price of one or more commodities, most often through futures contracts.

As an asset class, commodities are something of an outlier among market investments. They are not designed to produce value and pay dividends the way equities are: they are speculative, and their price is simply what a buyer is willing to pay at a given moment. That lack of correlation with equity markets has earned them a reputation as protection against falling share prices. Yet the asset class remains largely unknown and little used by retail investors.

And that goes double for a commodity ETF. To be precise, this is not an ETF, an Exchange Traded Fund, but an ETC, for Exchange Traded Commodity: a debt security.

It differs significantly from other trackers. Where a conventional ETF lets you invest in every company in a benchmark index in order to replicate its performance, a commodity tracker almost always invests in future delivery contracts. Performance therefore depends on the purchase price of the commodity concerned.

Good to know : Many commodity ETFs bundle several types of commodity together. Outside precious metals, most funds are mixed, which is an advantage for diversifying your portfolio.

How does a commodity ETF work?

This tracker works in a very specific way: its performance rests on the future, and it can trade on two types of market. These products are therefore very different from more conventional ETFs such as the well-known World ETF.

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A bet on the future

A commodity ETF works by constantly pushing the deadline forward. An index fund cannot take delivery of tonnes of soybeans, oil or gas and hand you a small share of it. All it can offer you is a stake in forward delivery contracts (futures), for instance the delivery of 10,000 tonnes of gas in four months.

To do so, the fund enters into futures contracts whose price is known and fixed from the outset, so it can differ from the market price of the commodity on the delivery date. To avoid physical delivery when the contract expires, the fund sells it and buys another one for the following months, and so on. This is the principle of the "roll-over". Because the initial contract is replaced by a new one, you can book gains as well as losses.

Two types of commodity market

The commodity market comes in two shapes: "contango" or "backwardation".

Contango describes a market where the forward price of the commodity is higher than the spot price. For an ETF, a market in contango produces losses every time a contract is rolled. Backwardation describes the opposite: the spot price is higher than the forward price, so rolling generates a roll gain instead.

Things are not that simple, though. Contracts can be rolled in several ways, using the different combinations of contracts available to the fund. The cost of rolling therefore changes every day, and that structure is why the return of a commodity ETF can differ from the price of the physical commodity.

Good to know : Commodity prices depend on many natural and human factors. Unlike a stable product such as a real-estate ETF, they are very hard to predict. You can only judge their performance from past and current data. Physical commodity ETFs naturally tend to focus on precious metals such as gold, silver or platinum, which are easy to store.

Why invest in a commodity ETF?

Above all because they offer significant diversification. Like any tracker, a commodity ETF lets you invest in a large number of assets with a single order.

And even though long-term gains are hard to come by given the many unknowns, investing in a commodity ETF can reduce the volatility of your portfolio.

Commodities have traditionally been uncorrelated with equities, and their volatility has historically been less correlated with that of the stock market.

The work of Gorton and Rouwenhorst (Facts and Fantasies about Commodity Futures, 2006) showed that commodities, historically uncorrelated with equities, can reduce a portfolio's overall volatility without eroding its expected return.

Finally, trackers keep costs generally low, and returns are barely dented by low management fees: between 0.12% and 0.46% per year depending on the fund (see the table below, figures checked on JustETF). They can therefore be very useful within diversified wealth management.

For investors tracking several investment options at once, apps such as Finary centralise the monitoring of ETF and equity positions across every broker.

Good to know : A commodity ETF offers many advantages in terms of management and cost, but it must not be forgotten that this is a fairly risky long-term investment. Precious metals have historically been less volatile than other commodities.

What are the different commodity ETFs?

The main commodity ETCs fall into two families: broad trackers, exposed to a basket of commodities through futures contracts, and physical trackers on precious metals such as gold.

Few commodity ETFs actually track an index made up 100% of commodities, precious metals aside. Many funds labelled "commodities" in fact track the shares of the producing companies, TotalEnergies for oil for example.

There are, however, ETCs with direct exposure, through futures contracts or physical holding of the metal. Here are the main ones available on the euro market, with fees and assets as of 08/2026 (source JustETF, link on each ISIN):

Good to know : Diversification is of course the watchword of a well-built portfolio, and commodity ETFs are one way to achieve it. You do need to be aware that they work very differently from conventional ETFs. The performance of a commodity tracker can move a long way from the spot price of the commodity concerned as contracts are rolled, which can affect a long-term asset allocation strategy. This type of investment is therefore better suited to short-term positions and/or to high risk profiles.

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Frequently asked questions

Is a commodity ETF eligible for the PEA?

Yes. The iShares Diversified Commodity Swap ETF, for example, is eligible for the PEA (a French tax-advantaged equity savings account), so you can combine the diversification commodities provide with the PEA's favourable tax treatment, subject to holding conditions.

Which commodities should you favour in an ETF?

Precious metals have historically been considered less volatile than other commodities. You can also take positions in agricultural products such as sugar, corn or soybeans.

Which ETF should you choose for oil?

There are many ETFs for investing in the oil market. Most of them, however, are trackers on oil equities or on a basket of commodities, not pure oil ETFs. The Amundi Bloomberg Equal-weight Commodity ex-Agriculture UCITS ETF EUR Hedged Acc, for example, gives you exposure to oil alongside other commodities.

Is a commodity ETF risky?

Yes. Its performance depends on rolling futures contracts and can diverge from the spot price of the commodity it tracks for long periods. Agricultural commodities and energy are highly volatile; only precious metals such as gold have historically proved more stable. This product carries a risk of capital loss.

Commodity ETF or ETC: what is the difference?

A conventional ETF holds a basket of shares and replicates an index. For commodities, the correct term is ETC (Exchange Traded Commodity), a debt security backed either by futures contracts or by physical metal in the case of gold and silver. The mechanics and the tax treatment can differ.

How are gains on a commodity ETF taxed?

According to the French tax authority (impots.gouv.fr), gains realised on the sale of a commodity ETC are, like other securities, subject to the flat tax (PFU) of 31.4% (12.8% income tax and 18.6% social levies), unless you opt for the progressive income tax scale.

Sources

AMF, ETFs (trackers): characteristics and risks

AMF, Glossary: trackers or ETFs

impots.gouv.fr, Taxation of capital gains on securities (PFU)

Gorton and Rouwenhorst, Facts and Fantasies about Commodity Futures, 2006

JustETF, factsheet Amundi Bloomberg Equal-weight Commodity ex-Agriculture UCITS ETF (LU1900069219)

JustETF, factsheet BNP Paribas Easy Energy & Metals Enhanced Roll (LU1291109533)

JustETF, factsheet iShares Diversified Commodity Swap UCITS ETF (DE000A0H0728)

JustETF, factsheet Amundi Physical Gold ETC (FR0013416716)