For Day Traders: The Most Liquid ETF for Every Commodity

The introduction of commodity ETFs brought trading to a whole new level, as your average retail investor now has the opportunity to trade something like natural gas futures through a single ticker. As the years have gone on, a number of these products have grown to be some of the most widely-used financial instruments for their respective commodity. One advantage to ETFs, however, is that liquidity is not hindered by average volume due the the creation process. Instead, there will just be some funds that are more liquid and tradable than others [for more commodity ETF news and analysis subscribe to our free newsletter].

For those who wish to utilize these products, we outline to most actively-traded ETFs for all major commodities. We have quantified the winner by using trailing three month volume as of the end of September 2012. Note that commodities that have just one ETF are depicted with an asterisk, leaving plenty of room for competition from hopeful issuers.

Precious Metals

Commodity ETF Volume
Gold SPDR Gold Trust (GLD) 8,900,000
Silver iShares Silver Trust (SLV) 11,500,000
Platinum Physical Platinum Shares (PPLT) 76,000
Palladium Physical Palladium Shares (PALL)  79,000

It may come as a shock to not see gold top out the list, but many investors forget that silver is far more volatile than its gold counterpart. Silver tends to jolt back and forth and be very trend-dependent, giving it such a high volume. Silver has also recently been picking up steam as many advisors and experts feel it to be a better buy than gold.

Energy

Commodity ETF Volume
WTI Crude United States Oil Fund (USO) 8,400,000
Brent Oil United States Brent Oil Fund (BNO) 46,000
Natural Gas United States Natural Gas Fund (UNG) 12,000,000
Gasoline United States Gasoline Fund (UGA)* 40,500
Heating Oil United States Diesel Heating Oil Fund (UHN)* 4,700

No surprises here. UNG has been one of the most widely traded commodity products for quite some time. The fund caught fire earlier this year and has been going on a 50% tear in just a few months. Even still UNG has been one of the worst performing ETFs in history so it is probably best to leave it for the active traders and speculators [see also 25 Ways To Invest In Natural Gas].

Agriculture

Commodity ETF Volume
Cotton Dow Jones-UBS Cotton Total Return Sub-Index ETN (BAL) 20,000
Coffee Dow Jones-UBS Coffee ETN (JO) 35,000
Sugar Dow Jones-UBS Sugar Subindex Total Return ETN (SGG) 17,000
Cocoa Dow Jones-UBS Cocoa Total Return Sub-Index ETN (NIB) 45,000
Corn Teucrium Corn Fund (CORN)* 241,000
Soybeans Teucrium Soybean Fund (SOYB)* 49,000
Wheat Teucrium Wheat Fund (WEAT)* 10,000
Livestock DJ-UBS Livestock Total Return Sub-Index ETN (COW) 40,000

The interest in corn clearly outdoes the rest of the agricultural space despite the massive spike in soybeans earlier this year. SOYB simply hasn’t caught on with investors the same way that CORN has, as corn is a much more popular commodity from a consumer standpoint. It should also be noted that some of these figures could be inflated given the severe drought that hit the U.S. earlier this summer.

Industrial Metals

Commodity ETF Volume
Copper DJ-UBS Copper Total Return Sub-Index ETN (JJC) 77,000
Aluminum Dow Jones-UBS Aluminum Total Return Sub-Index ETN (JJU) 1,500
Lead Dow Jones-UBS Lead Total Return Sub-Index ETN (LD) 2,800
Nickel DJ-UBS Nickel Total Return Sub-Index ETN (JJN) 1,500
Tin Dow Jones-UBS Tin Total Return Sub-Index ETN (JJT)* 2,400

Other than copper, there is not much action going on here. Even the low volumes for copper are a bit surprising given just how important of a commodity it is. The hope is that as the commodity world continues to expand its wings, these funds will be able to hit home for more investors [see also The Ten Commandments of Commodity Investing].

Alternative Energy

Commodity ETF Volume
Solar Guggenheim Solar ETF (TAN) 46,000
Wind First Trust ISE Global Wind Energy Index Fund (FAN) 9,400
Nuclear Market Vectors Nuclear Energy ETF (NLR) 37,000

Last but not least the alternative energy world has gotten some fair representation from ETFs. These funds have performed pretty poorly, but that does not mean that they cannot be used in an effective manner. All three alternative energy products offer compelling volumes to complete the trade of your choice.

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Disclosure: No positions at time of writing.

This entry was posted in Academic Research, Actionable Ideas, Agriculture, Alternative Energy, Aluminum, Asset Allocation, Brent Oil, Cocoa, Coffee, Commodity ETF Analysis, Commodity ETFs, Copper, Corn, Cotton, Energy, Gasoline, Gold, Heating Oil, Industrial Metals, Lead, Livestock, Natural Gas, Nickel, Nuclear, Palladium, Platinum, Precious Metals, Silver, Solar, Soybeans, Sugar, Tin, Wheat, Wind and tagged , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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