Diversification for individual investors often refers simply to a ratio of stocks relative to bonds, with various categories of equities and fixed income comprising the appropriate risk-tolerance of an investor.  Outside of institutional investing, commodities often remain left out of the conversation.  And for those attempting to understand the supply and demand dynamics affecting international trade and price of the goods and services everyone consumes, the commodity markets are a great place to take a peek under the hood.

Like many markets around the world, the increasing pervasiveness of ETFs has allowed for anyone to access commodity exposure if desired.  For those looking to invest in anything frowheat to uranium, an ETF exists. While less common ETFs like these may continue to gain traction, precious metals and fossil fuels dominate the market value of the various traded commodities.

Source: etfdb.com (7/15/23)

As noted above though, all sorts of commodities can now be traded by retail investors, for better or worse.  Below are some interesting examples, but are by no means an exhaustive look at the commodity ETFs to choose from.

For those looking to access the agricultural markets, the ETF provider Teucrium has various staple foods in its investment offerings, both in the form of diversified strategies ($TILL, $OAIA, $TAGS), but also in the less common form of individual commodity ETFs:

Source: Teucrium

Sprott Asset Management, is one of many ETF providers that provides investors with choices related to investing in metals, both through companies that mine them, as well as through the price of the metal itself.  Though they’re perhaps most known for their Uranium ETF, which will be looked at in further depth in a future MacroThoughts article.

Source: etfdb.com (7/15/23)

One of the most interesting things about following the commodity space is how much these commodities play into so many things, from the food princes in grocery stores, to signs of geopolitical tension.  For those looking to invest in them, investments outside of the precious metals and energy spaces should likely play an extremely limited role in their overall purposes.  But their ability to provide uncorrelated returns to standard portfolios, hedge geopolitical risk, and give exposure to potential secular tailwinds should not be ignored with the advent of so many ETF options.