4 Commodities ETFs to Invest in 2026

4 commodities ETFs to invest in 2026

When investing in commodity ETFs, it’s important to choose funds that offer broad diversification across multiple sectors like metals, energy, and agriculture while keeping costs low.

For this list, we screened for ETFs that provide exposure to a wide range of commodities rather than focusing on a single asset like gold or oil.

We also prioritized funds that don’t require a K-1 tax form, which is commonly issued by partnership-structured ETFs. K-1s can complicate tax filings and cause delays compared to standard 1099 forms, making them less convenient for individual investors.

Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)

The Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC +0.58%) tracks the DBIQ Optimum Yield Diversified Commodity Index Excess Return, providing exposure to 14 heavily traded commodities across energy, precious metals, industrial metals, and agriculture. The fund includes gasoline, Brent crude, NY harbor ULSD, WTI crude oil, natural gas, gold, corn, soybeans, wheat, sugar, zinc, aluminum, copper, and silver futures.

What sets this Invesco ETF apart is its optimum yield strategy, which helps manage roll yield -- the impact of replacing expiring futures contracts with new ones. By selecting contracts with the best price curve positioning, the fund aims to reduce the negative effects of contango, where later-dated futures contracts are more expensive than near-term ones, eroding returns over time.

With an expense ratio of 0.59%, the fund is fairly affordable for a commodity ETF. However, it's not the most tax-efficient choice, since it tends to pay large capital gains distributions in December that can lead to unexpected tax liabilities for investors in taxable accounts.

Teucrium Agricultural Strategy No K-1 ETF (TILL)

Commodities can generally be divided into four main categories: precious metals (gold, silver, platinum), energy (crude oil, natural gas, gasoline), base metals (copper, aluminum, zinc), and agricultural commodities (corn, wheat, soybeans, sugar).

For investors looking to focus on agriculture, the Teucrium Agricultural Strategy No K-1 ETF (TILL +0.96%) provides broad exposure to crop-based commodities. The fund takes a long-only approach with equal-weighted positions in corn, wheat, soybeans, and sugar futures, rebalancing monthly with one contract per market.

Unlike metals and energy, which are driven by industrial demand and macroeconomic trends, agricultural commodity prices are influenced by weather patterns, crop yields, supply chain disruptions, and government policies on trade and subsidies. These factors create a different kind of volatility compared to other commodities.

This agricultural ETF has a 0.97% expense ratio and, like many commodity funds, makes annual distributions in December, which investors should consider for tax planning.

abrdn Physical Precious Metals Basket Shares ETF (GLTR)

The abrdn Physical Precious Metals Basket Shares ETF (GLTR +1.51%) is the only non-futures-based commodity ETF on this list. It physically holds gold, silver, platinum, and palladium bullion rather than using derivative contracts.

While gold and silver are well-known for their use in jewelry and investment, platinum and palladium have key roles in industrial applications, particularly in automotive catalytic converters, electronics, and even medical equipment.

This ETF's holdings are stored in London, with vault inspections conducted twice per year by Inspectorate International. The metals are allocated, meaning each bar is specifically assigned to the fund, and they meet the strict Good Delivery standards set by the London Platinum and Palladium Market (LPPM) and the London Bullion Market Association (LBMA), ensuring their authenticity and quality.

With a 0.60% expense ratio, this fund is a cost-effective way to gain diversified exposure to precious metals. It also has no distributions, making it more tax-efficient than commodity ETFs that pay out gains annually.

Should I invest in commodities ETFs?

Commodity ETFs can be valuable portfolio tools, but whether they’re right for you depends on your investment approach. There are two primary ways to use them.

The first is as a trading tool -- actively speculating on commodity price movements. This requires daily monitoring and a strong understanding of commodity cycles, as prices can be highly volatile. Traders often use leveraged or futures-based ETFs to capture short-term price swings, but these require careful risk management.

The second is for diversification -- allocating around 20% of a portfolio to commodities and rebalancing periodically. Since commodities have a low correlation to stocks and bonds, they can help stabilize a portfolio, especially during inflationary periods or market downturns. In 2022, for example, commodities rallied while both stocks and bonds declined, making them an effective hedge.

However, commodities can also experience steep losses when trends reverse, such as the collapse in oil prices during the COVID-19 pandemic. Additionally, many of these ETFs rely on futures contracts, which can lead to large end-of-year capital gains distributions, creating tax inefficiencies for investors in taxable accounts.

For those who understand the risks, tax implications, and market drivers, commodity ETFs can be a powerful tool -- but they require careful consideration before adding them to a portfolio.

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