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.
|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.
|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].
|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.
|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].
|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.
Disclosure: No positions at time of writing.