When President Donald Trump’s tariff policies triggered volatility in the stock market in April 2025, many investors turned to commodities like gold and silver as safe havens. The surge in the prices of both commodities was a reminder of why commodities belong in an efficient portfolio.
Commodities have the highest beta to changes in inflation among all asset classes, according to research by TD Asset Management. In simpler words, they experience the highest increase in value when inflation rises.
Similarly, commodities have low correlation to both equities and bonds, which makes them a key portfolio diversifier.
Interestingly, their role in portfolios is not merely to reduce risk but to increase risk-adjusted returns. TD Asset Management notes that a diversified portfolio that includes commodities has a higher Sharpe ratio – a measure of total return relative to the amount of risk an investor has incurred – than a standard diversified portfolio.
Therefore, adding commodities to your portfolio is a no-brainer. An efficient way to do this is to purchase commodity exchange-traded funds, or ETFs, instead of individual commodities. A commodity ETF allocates to different commodities, allowing you to enjoy a diversified exposure to this asset class. Instead of buying only gold or silver, you can gain exposure to all commodities in a way that reduces your risk, lowers cost and increases liquidity.
If you are seeking to diversify your portfolio with commodity ETFs, here are the eight options that you should consider:
| ETF | Expense ratio |
| VanEck Commodity Strategy ETF (ticker: PIT) | 0.55% |
| Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) | 0.59% |
| State Street SPDR Bloomberg Enhanced Roll Yield Commodity Strategy No K-1 ETF (CERY) | 0.28% |
| iShares GSCI Commodity Dynamic Roll Strategy ETF (COMT) | 0.48% |
| First Trust Global Tactical Commodity Strategy Fund (FTGC) | 0.98% |
| Harbor Commodity All-Weather Strategy ETF (HGER) | 0.68% |
| Franklin Responsibly Sourced Gold ETF (FGDL) | 0.15% |
| ProShares K-1 Free Crude Oil ETF (OILK) | 0.69% |
VanEck Commodity Strategy ETF (PIT)
PIT is an actively managed ETF that provides exposure to multiple commodity sectors, including energy, precious metals, industrial metals and agriculture. It invests in these commodities via futures contracts.
It also uses the 1099 tax structure, which means it provides access to commodities without K-1 tax reporting, which can be a hassle come tax season.
- Total net assets: $259.4 million
- Expense ratio: 0.55%
- Year-to-date return: 46.4%
- 30-day SEC yield: 2.1%
This ETF is ideal for: Investors who prefer the flexibility of actively managed ETFs.
Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)
PDBC is another actively managed ETF that invests in commodity-linked futures and other financial instruments that provide exposure to the most heavily traded commodities, including energy, precious metals, industrial metals and agriculture.
- Total net assets: $6.5 billion
- Expense ratio: 0.59%
- YTD return: 41.1%
- 30-day SEC yield: 2.3%
This ETF is ideal for: Investors who prefer the flexibility of actively managed ETFs.
State Street SPDR Bloomberg Enhanced Roll Yield Commodity Strategy No K-1 ETF (CERY)
CERY is a passively managed ETF that tracks the performance of the Bloomberg Enhanced Roll Yield Total Return Index. It uses a rules-based strategy that tilts it toward commodities with favorable roll yields (downward-sloping futures curves). CERY also aims to reduce the cost of rolling futures contracts while maintaining liquidity and broad exposure.
As the name indicates, investors receive a standard 1099 form instead of a partnership K-1.
- Total net assets: $1.1 billion
- Expense ratio: 0.28%
- YTD return: 34.2%
- 30-day SEC yield: 2.5%
This ETF is ideal for: Investors who want to minimize investment costs through a low expense ratio.
iShares GSCI Commodity Dynamic Roll Strategy ETF (COMT)
COMT is a passively managed commodity ETF that tracks the S&P GSCI Dynamic Roll Total Return Index.
It provides broad exposure to a wide range of commodities while using a dynamic roll strategy to minimize the cost of rolling futures contracts forward.
COMT also provides tax simplicity by providing investors with a 1099 form instead of a K-1.
- Total net assets: $1.2 billion
- Expense ratio: 0.48%
- YTD return: 44.1%
- 30-day SEC yield: 2.8%
This ETF is ideal for: Investors who want a passively managed commodity ETF that can match the performance of actively managed alternatives.
First Trust Global Tactical Commodity Strategy Fund (FTGC)
FTGC is an actively managed commodity ETF with a diversified exposure to a broad range of commodities. Unlike other commodity ETFs, it tilts more toward agriculture than energy.
Investors also receive a 1099 form rather than a K-1.
- Total net assets: $2.8 billion
- Expense ratio: 0.98%
- YTD return: 33%
- 30-day SEC yield: 1.8%
This ETF is ideal for: Investors who prefer an actively managed approach that favors agriculture.
Harbor Commodity All-Weather Strategy ETF (HGER)
HGER is a broad-based commodity ETF designed to perform across different market and inflationary periods. It tracks the Quantix Commodity Index.
To maintain its all-weather status, it prioritizes commodities with high inflation sensitivity and favorable roll yield. Also, it uses proprietary quantitative rules to adjust commodity weights based on inflation sensitivity, scarcity and roll yield.
HGER also offers simple 1099 tax reporting.
- Total net assets: $3.4 billion
- Expense ratio: 0.68%
- YTD return: 34%
- 30-day SEC yield: 2.3%
This ETF is ideal for: Investors who want steady performance across different markets and inflationary regimes.
Franklin Responsibly Sourced Gold ETF (FGDL)
Unlike the previous funds, FGDL is a single-commodity ETF. It invests in gold bars that meet responsible sourcing standards as approved by the London Bullion Market Association.
- Total net assets: $482.5 million
- Expense ratio: 0.15%
- YTD return: 8%
- 30-day SEC yield: N/A
This ETF is ideal for: Investors who want ethical exposure to gold prices instead of broad exposure to multiple commodities.
ProShares K-1 Free Crude Oil ETF (OILK)
OILK is another single-commodity ETF. It invests in crude oil futures, tracking the Bloomberg Commodity Balanced WTI Crude Oil Index. ProShares notes that it’s the only K-1-free crude oil ETF.
- Total net assets: $290.3 million
- Expense ratio: 0.69%
- YTD return: 63.8%
- 30-day SEC yield: N/A
This ETF is ideal for: Investors who want exposure to crude oil instead of broad exposure to multiple commodities.
Choosing the Right Commodity ETF for Your Portfolio
When choosing the right commodity ETF, the first consideration is whether you want a single-commodity ETF or a broad commodity ETF.
Though single-commodity ETFs can be a good way to increase your portfolio returns during certain market conditions, broad commodity ETFs can provide more stability by reducing your risk exposure.
The second consideration is the difference between passive and active management strategies. Passively managed funds tend to have a lower expense ratio, while actively managed strategies tend to have higher returns.
However, the most important thing is checking the expense ratio-return dynamics, as some actively managed funds can underperform passively managed funds, and some passively managed funds can have expense ratios that are close to those of actively managed funds.
Third, evaluate the sector weight. If you prefer certain sectors, then you should choose ETFs with significant allocation to them.
Finally, consider the Sharpe ratio of the different ETFs as an indication of their risk-adjusted returns.
Since one of the goals of diversifying with commodities is to increase risk-adjusted returns, commodity ETFs with higher risk-adjusted returns will be more beneficial.
In the end, you should talk to your financial advisor before choosing any of these commodity ETFs. They are in the best position to offer personalized advice that matches your financial goals, risk tolerance and time horizon.
Furthermore, your financial advisor can help you decide what portion of your portfolio you should allocate to commodities.