Exchange-Traded Funds (ETFs) are excellent investments for any Canadian portfolio as they offer exposure to a basket of stocks, bonds, or commodities in one asset.
Commodity ETFs are the easiest way for Canadian investors to buy assets such as precious metals, futures contracts, and of course, shares of commodity companies.
ETFs provide portfolio diversification and have much lower fees than traditional mutual funds in Canada.
For Canadian investors, you can easily buy the best commodity ETFs at any discount brokerage for minimal or even zero commission trading.
Top Canadian Commodity ETFs
Here are the top 13 Canadian commodity ETFs for investors this year. All the figures listed below are as of March 2023.
- Ticker symbol: XEG.TO
- MER: 0.60%
- Number of Holdings: 29
- 5-year average annual return: 26.41%
- Invests in: Canadian oil stocks
- Issuer: Blackrock iShares
- Assets under management: $1.75 billion
- Distribution yield: 3.08%
- 12-month trailing yield: 3.50%
- Inception date: March 19, 2001
XEG is an iShares ETF established in 2001 that trades on the Toronto Stock Exchange.
This ETF comes with a high-risk rating and holds 29 of the largest Canadian oil industry stocks that trade on the TSX.
Its top three holdings are Suncor Energy (SU), Canadian Natural Resources (CNQ), and Cenovus Energy (CVE).
XEG has a slightly higher than average MER at 0.60% and pays a quarterly dividend with an annualized yield of 3.08%.
- Ticker symbol: XGD.TO
- MER: 0.61%
- Number of Holdings: 43
- 5-year average annual return: 9.18%
- Invests in: Global Gold stocks
- Issuer: Blackrock iShares
- Assets under management: $1.06 billion
- Distribution yield: 1.93%
- 12-month trailing yield: 1.77%
- Inception date: March 23, 2001
XGD is another Blackrock iShares ETF established in 2001 and trades on the Toronto Stock exchange.
This fund holds 43 different gold stocks from companies around the world. Canada leads the way with a 68.08% weight of stocks in XGD; the US is second with 21.11%.
It has a high risk rating and pays an annualized dividend yield of 1.93% that is paid out semi-annually.
XGD’s top three holdings are Newmont (NEM), Barrick Gold Corp (ABX), and Franco Nevada Corp (FNV), which account for more than 43% of the fund’s value.
Horizons Crude Oil ETF
- Ticker symbol: HUC.TO
- MER: 0.88%
- Number of Holdings: N/A
- 5-year average annual return: 9.98%
- Invests in: Gold futures contracts
- Issuer: Horizons ETFs
- Assets under management: $23 million
- Distribution yield: N/A
- 12-month trailing yield: N/A
- Inception date: June 24, 2009
HUC is a Horizons ETF established in 2009 and trades on the Toronto Stock Exchange in Canadian dollars.
It tracks the benchmark Solactive Light Sweet Crude Oil Winter MD Rolling Futures Index minus fees.
This ETF does not hold any stocks and only holds futures contracts for gold prices.
Compared to its peers, it has a high MER of 0.88% and does not pay any distributions.
BMO Equal Weight Oil & Gas Index ETF
- Ticker symbol: ZEO.TO
- MER: 0.61%
- Number of Holdings: 10
- 5-year average annual return: 9.43%
- Invests in: Canadian oil stocks
- Issuer: BMO Global Asset Management
- Assets under management: $199 million
- Distribution yield: 4.70%
- 12-month trailing yield: N/A
- Inception date: October 20, 2009
ZEO is a BMO Global Asset Management ETF established in 2009 that trades on the Toronto Stock Exchange.
It tracks ten of the largest Canadian oil stocks on the TSX.
This ETF takes an equal-weighted approach with its holdings and pays a 4.70% annualized quarterly dividend.
The top three holdings in ZEO are Imperial Oil (IMO.TO), Suncor Energy (SU.TO), and Canadian Natural Resources (CNQ.TO).
- Ticker symbol: COW.TO
- MER: 0.71%
- Number of Holdings: 36
- 5-year average annual return: 13.09%
- Invests in: Global agriculture stocks
- Issuer: Blackrock iShares
- Assets under management: $434 million
- Distribution yield: 1.14%
- 12-month trailing yield: 2.07%
- Inception date: December 19, 2007
COW is a Blackrock iShares ETF that was established in 2007 and trades on the TSX. It is designed to track the global agriculture sector with a 79.1% weighted allocation to US companies.
This ETF has a medium risk rating and pays an annualized distribution yield of 1.14%.
The top three holdings in COW are Archer Daniels Midland (ADM), Corteva (CTVA), and Mosaic (MOS).
Global X Silver Miners ETF
- Ticker symbol: NYSEARCA: SIL
- MER: 0.65%
- Number of Holdings: 34
- 5-year average annual return: -1.6%
- Invests in: Global Silver Miner stocks
- Issuer: Global X
- Assets under management: $906 million
- Distribution yield: 0.40%
- 12-month trailing yield: N/A
- Inception date: April 19, 2010
SIL is a Global X ETF established in 2010 that trades on the US-domiciled NYSEARCA exchange. Canadian investors will need to buy this ETF in US dollars.
This ETF tracks the global silver mining sector, with a 61.8% allocation to Canadian silver mining stocks.
The top three holdings in SIL are Wheaton Precious (WPM.TO), Pan American Silver Corp (PAAS.TO), and Korean Zinc Co Ltd (010130KS). Together, these three stocks account for nearly 45% of the value of the ETF.
Horizons Copper Producers Index ETF
- Ticker symbol: COPP.TO
- MER: 0.65%
- Number of Holdings: 17
- 5-year average annual return: N/A
- Invests in: Copper Miners
- Issuer: Horizons ETFs
- Assets under management: $3.1 million
- Distribution yield: 1.18%
- 12-month trailing yield: 1.10%
- Inception date: May 17, 2022
COPP.TO is a brand new ETF from Horizons, introduced in May 2022.
This ETF is Canada’s first Copper miners ETF and is meant to track the Solactive North American Listed Copper Producers Index.
Its three largest holdings are concentrated in the Southern Copper Corporation (SCCO), Capstone Copper Corp (CS.TO), and Freeport-McMoran Inc (FCX).
Horizons S&P/TSX Capped Energy Index ETF
- Ticker symbol: HXE.TO
- MER: 0.27%
- Number of Holdings: 10
- 5-year average annual return: 10.65%
- Invests in: Canadian Energy Stocks
- Issuer: Horizons ETFs
- Assets under management: $91 million
- Distribution yield: 3.60%
- 12-month trailing yield: 4.54%
- Inception date: September 17, 2013
HXE.TO is a Horizons ETF that tracks the S&P/TSX Capped Energy Index. This type of fund caps the maximum weight of any one stock.
This ETF holds some of the biggest names in the Canadian energy sector, including Canadian Natural Resources (CNQ.TO), Suncor Energy (SU.TO), and Cenovus Energy Inc (CVE.TO).
It also pays a generous dividend yield of 3.60% which is one of the benefits of investing in Canadian energy stocks.
Horizons Natural Gas ETF
- Ticker symbol: HUN
- MER: 0.88%
- Number of Holdings: N/A
- 5-year average annual return: 26.16%
- Invests in: Natural Gas Futures Contracts
- Issuer: Horizons ETFs
- Assets under management: $12.8 million
- Distribution yield: N/A
- 12-month trailing yield: N/A
- Inception date: June 24, 2009
HUN is a Horizons ETF established in 2009 and trades on the Toronto Stock Exchange.
This ETF exclusively holds Natural Gas futures contracts and is designed to mirror the Solactive Natural Gas Winter MD Rolling Futures Index ER.
It pays no distributions and has a fairly high MER of 0.88%. This is a part of the same line of commodities futures ETFs from Horizon that includes the aforementioned HUC and HUZ.
- Ticker symbol: XBM.TO
- MER: 0.61%
- Number of Holdings: 33
- 5-year average annual return: 10.74%
- Invests in: Global Base Metals stocks
- Issuer: Blackrock iShares
- Assets under management: $280 million
- Distribution yield: 5.27%
- 12-month trailing yield: 4.92%
- Inception date: April 12, 2011
XBM is an iShares ETF that trades in Canadian dollars on the TSX. This fund tracks global companies involved in the extraction or production of base metals.
The risk indicator for this ETF is high despite being fairly well-diversified across different global regions. Canadian and US stocks account for just over 70% of the portfolio allocation.
The top holdings in XBM include BHP Group ADR LTD (BHP), Rio Tinto ADR REPTG ONE PLC (RIO), and Teck Resources (TECK.B.TO).
Horizons Gold ETF
- Ticker symbol: HUG.TO
- MER: 0.30%
- Number of Holdings: N/A
- 5-year average annual return: 4.29%
- Invests in: Gold Bullion Futures Contracts
- Issuer: Horizons ETFs
- Assets under management: $14 million
- Distribution yield: N/A
- 12-month trailing yield: N/A
- Inception date: June 24, 2009
HUG is another futures contracts-based ETF for commodities from Horizons that trades on the TSX.
This ETF is designed to track the Solactive Gold Front Month MD Rolling Futures Index ER.
It exposes Canadian investors to gold bullion futures contracts through an easy-to-purchase ETF.
Invesco DB Agriculture Fund
- Ticker symbol: NYSEARCA: DBA
- MER: 0.91%
- Number of Holdings: N/A
- 5-year average annual return: 1.67%
- Invests in: Various Commodities Futures Contracts
- Issuer: Invesco
- Assets under management: $1.97 billion
- Distribution yield: N/A
- 12-month trailing yield: N/A
- Inception date: January 5th, 2007
DBA is an Invesco investment product that trades on the US-domiciled NYSEARCA index. Canadian investors will have to buy shares in US dollars.
This ETF holds various different commodities futures contracts. The top three holdings are Wheat, Soybeans, and Corn.
According to the Invesco website, you cannot invest directly in this ETF, rather it is a rules-based index that holds fixed-income assets like US Treasuries. Shareholders make interest income off of these holdings.
Global X Uranium ETF
- Ticker symbol: NYSEARCA: URA
- MER: 0.69%
- Number of Holdings: 47
- 5-year average annual return: 8.5%
- Invests in: Global Uranium stocks
- Issuer: Global X ETFs
- Assets under management: $1.38 billion
- Distribution yield: 0.46%
- 12-month trailing yield: N/A
- Inception date: November 4, 2010
URA Is a Global X ETF that is US-domiciled and trades on the NYSEARCA exchange. Canadian investors will need to buy shares in US dollars.
This ETF tracks global companies involved in the uranium industry. Canada has a 50% allocation in this portfolio, followed by Australia, South Korea, and Japan.
The top three holdings in URA are Cameco Corp (CCO), Sprott Physical Uranium Trust (UU), and NAC Kazatog-REGS (KAP).
What is a Commodity ETF?
A commodity is defined as a raw material or naturally occurring good that can be bought, sold, or traded.
Examples of commodities include precious metals, agricultural goods, and energy products like crude oil or natural gas.
Commodity ETFs are designed funds that hold a basket of commodity stocks, actual physical commodities, or commodities futures contracts.
These industries are typically fairly stable as far as investments go, and even pay dividend yields to shareholders.
For the most part, commodities have been inversely related to other assets like stocks and bonds. In times of market volatility or inflation, commodities may continue to perform well.
How To Buy The Best Canadian Commodity ETFs in 2024
Online stock investing has made it easy for Canadian investors to buy ETFs at discount brokerages in Canada.
Questrade
Questrade is Canada’s oldest and largest independent discount brokerage platform. It offers an intuitive and easy-to-use site for investors of all experience levels.
This platform offers no-commission purchases for ETFs and charges a competitive $4.95 for the sale of ETF positions.
You can also use this platform to trade options, bonds, mutual funds, GICs, currencies, and more.
Questrade
Trade stocks, ETFs, options, FX, bonds, CFDs, mutual funds, etc.
Get $50 trade credit with $1,000 funding
Low and competitive trading fees
No quarterly inactivity fees
Access to advanced tools and trading data
Top platform for advanced traders
Transfer fees waived
Wealthsimple Trade
This discount brokerage platform is popular amongst younger investors because of its no-commission trading for stocks and ETFs. You don’t pay a trading fee to buy or sell stocks or ETFs.
Established in 2014, Wealthsimple Trade has a highly rated platform for both mobile and desktop, and even offers crypto investing in its ecosystem.
It is available on all devices.
Wealthsimple Trade
Trade stocks, ETFs, and options
Excellent trading platform for beginners
Deposit $150+ to get a $25 cash bonus
Transfer fees waived up to $150
Downsides of Commodity ETFs
The downsides of investing in commodity ETFs are few but should still be known before hitting the buy button.
Canadian investors might notice that commodities ETFs come with higher MERs which will definitely take away from long-term gains.
Investing only in commodities can be akin to putting all of your eggs in one basket. These ETFs are highly affected by the prices of the underlying commodities.
Investors should not expect major long-term capital gains from commodity ETFs, rather steady and stable performance with the chances of a distribution as well.
Best Commodity ETFs in Canada FAQs
This is certainly up to each individual investor’s personal risk tolerance and investing goals. In terms of the best overall Canadian commodity ETF, it’s hard to go against the first ETF mentioned in this article, XEG. This ETF has nearly $2 billion in assets under management, shows reasonable growth over time, and pays a steady distribution.
Any Canadian brokerage will offer commodity stocks or commodity ETFs in Canada. The easiest and best way to do this is to find a discount brokerage in Canada like Wealthsimple Trade or Questrade, and enjoy no-commission trading for ETFs.
Vanguard Canada does not offer any commodity ETFs as of March 2023. To invest in a Vanguard commodity ETF, Canadian investors will have to invest in Vanguard’s US-domiciled ETF offerings.
Generally, it is believed that gold acts as one of the best hedges for inflation, so any gold-related ETF should do well in a high-inflation environment. Other ETFs that hold high cash flow and profitable companies should also do well for Canadian investors.
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