Simplifying commodities exposure through ETFs

After establishing why commodities are back on the radar in previous parts of this series, the focus naturally shifts to how advisors are implementing these exposures on behalf of clients.

It turns out that advisors are overwhelmingly choosing the simplest, most liquid path. Rather than delving into complicated strategies or illiquid private investments, they are turning to exchange-traded funds (ETFs) – a straightforward approach that aligns with advisors’ need for quick, flexible, and low-cost execution.

This preference for ETFs is no more evident than in the data from a recent survey conducted by Aberdeen Investments in partnership with CoreData Research, where we surveyed 300 US financial advisors.¹ Roughly 60% of advisors invest in commodities through sector-specific commodity ETFs, and 56% use broad-based commodity ETFs (Chart 1).

In practical terms, six out of ten advisors might use an energy or precious metals ETF to target a single segment like oil or gold, while more than half opt for diversified commodity index ETFs covering a wide range of resources in one fund.

By comparison, few advisors are using complex alternatives such as hedge funds or managed futures – typically fewer than one in five advisors employ those more sophisticated vehicles. The message is clear: ETFs have become the go-to route for commodity exposure, far outpacing any other method in popularity.

ETFs: The simple, liquid choice for commodities

Why have commodity ETFs become so prevalent? The appeal largely comes down to practicality. Financial advisors are drawn to tools that help simplify their work and help strengthen client portfolios through broader diversification and flexibility.

Liquidity

Liquidity has become a non-negotiable requirement. In uncertain markets, advisors want the ability to adjust portfolios swiftly. In fact, nearly two-thirds of advisors (61%) (Figure 1) say they will favor more liquid alternatives for any new allocations in the year ahead.

This preference gives commodity ETFs a major advantage over vehicles like private partnerships or commodity-focused hedge funds, which often lock up capital or limit redemptions. ETFs trade throughout the day on public exchanges, allowing fast entry or exit. An advisor can reduce a client’s commodity exposure on short notice or ramp it up quickly in response to market changes – all by executing a simple trade in an ETF. This daily tradability means ETFs align perfectly with advisors’ need for flexibility and quick liquidity in portfolio management.

Ease of use

ETF-based commodity strategies are straightforward to implement, requiring no specialized infrastructure. An ETF can be bought or sold in a regular brokerage account just like any stock, without the operational complexity of managing futures contracts or the high minimums and paperwork associated with private funds.

This simplicity lowers the barrier to entry for commodities investing. As a result, many advisors who want to introduce commodities for the first time find ETFs to be a convenient starting point. There’s no need for special expertise in futures trading or dealing with separate custodial accounts – an important consideration when advisors are looking to expand client portfolios into new asset classes without overcomplicating their practice.

Cost efficiency

Commodity ETFs typically carry low expense ratios compared to actively managed alternatives. Traditional commodity-focused hedge funds or managed futures programs often charge high management and performance fees.

In contrast, broad commodity index ETFs tend to provide low-cost market exposure. Lower fees make it more feasible to hold commodities as a long-term strategic allocation, knowing that the cost drag on performance may be minimal. For fee-conscious advisors and investors, this is a significant advantage of the ETF approach.

Flexibility

ETFs enable advisors to choose how they want to invest in commodities with precision. If the goal is broad exposure to the asset class, there are index-based commodity ETFs that offer a single, diversified investment covering energy, metals, and agriculture in one sweep.

On the other hand, if an advisor prefers to tilt the portfolio toward a specific sector or theme – say, focusing on precious metals for an inflation hedge, or energy commodities during a particular market cycle – there are sector-specific commodity ETFs that provide targeted exposure to those niches.

Targeted commodities strategies take precedence

In fact, seven-in-ten advisors prefer targeted strategies for greater customization and specific thematic exposure. This preference often reflects a desire to align allocations with client goals or macroeconomic views, such as inflation protection or energy transition themes

While targeted strategies dominate, broad commodity ETFs still play a critical role. For many advisors, greater diversification is the primary factor driving interest in broad strategies. These funds offer exposure across multiple sectors, helping to smooth volatility and reduce concentration risk. Ease of implementation is another key advantage – especially for wirehouse advisors, 71% of whom cite it as their top reason for favoring targeted strategies (Chart 2).

The preference for targeted strategies may also reflect limited familiarity with certain commodity types. Advisors tend to favor sectors they know well – such as precious metals and energy – while avoiding less familiar areas like grains, livestock, or softs. This knowledge gap, which we explored more so in Part One,  reinforces the appeal of targeted ETFs, which allow advisors to focus on the segments they understand best.

Broad and targeted ETFs serve distinct, complementary purposes

The fact that both broad commodity ETFs and specialized commodity ETFs are widely used (with 56% and 60% adoption, respectively) underlines that advisors value having both options at their disposal. This efficient access to either broad – 29% of advisors surveyed prefer broad based off the following strategies (Chart 3) – or targeted commodity baskets is something few other investment vehicles can offer so readily.

Together, these attributes mean that commodity ETFs can serve dual roles in a portfolio. They are well suited for strategic allocations – for instance, maintaining a steady 5% position in a broad commodity fund (Chart 4) as a long-term inflation hedge or diversifier – while also handy for tactical adjustments.

Because ETFs are so liquid and easy to trade with, an advisor can swiftly increase exposure to a particular commodity sector if market conditions turn favorable, then reduce it just as quickly when objectives are met. The same instrument can thus be used to implement a long-term view or a short-term trade without the need for different accounts or elaborate strategies.

This versatility is highly valued, as nearly half of advisors use commodities in both strategic and tactical ways in client portfolios (47% in our survey). ETFs have emerged as the common denominator that makes both approaches feasible.

ETFs: Advantage in action

Ultimately, the rise of commodity ETFs comes down to giving advisors and investors what they crave: convenience, cost-effectiveness, and control. By offering a liquid and user-friendly way to tap into commodities, ETFs remove many of the hurdles that once kept this asset class on the sidelines. There’s no steep learning curve, no opaque strategies, and no lengthy lock-up periods – just straightforward access to the performance of commodities, delivered through familiar investment accounts.

From niche access to mainstream adoption

This dynamic has made ETFs the default choice for commodity allocations in modern portfolios. The data points to an unambiguous trend: advisors are gravitating towards the easiest, most efficient tools available, and ETF platforms have decisively won that trust. As a result, commodity exposure is no longer the domain of specialized hedge funds or complex instruments. Instead, it’s becoming a mainstream component of portfolios, implemented overwhelmingly via exchange-traded funds.

Transparency that keeps pace with the market

One of the key advantages of ETFs is their transparency. Most ETFs publish their full holdings on a daily basis, allowing investors to see exactly what they own and how exposures are evolving in near real time. By contrast, mutual funds typically disclose holdings only quarterly, and those reports can be released with a lag of up to 60 days after quarter end. This delay can leave investors relying on outdated information, particularly in fast-moving markets like commodities, where positioning and exposures can shift quickly.

Turning portfolio theory into implementation

By leaning on ETFs for commodity exposure, advisors can better align with their clients’ priorities. In a landscape where liquidity is prized and simplicity is essential, ETFs deliver both. As our Commodities Research Series has shown, commodities are increasingly valued for diversification, inflation protection, and long-term growth potential.

Equally important is how those benefits are accessed. With their low friction and high flexibility, commodity ETFs are helping advisors translate portfolio theory into practical outcomes – elevating commodities from a niche allocation to a core tool for building stronger, more adaptive portfolios.

Endnotes

¹ CoreData is a global specialist market research consultancy and unique collaboration of experienced research, marketing, industry, and media professionals.

Important information

An investor should consider the investment objectives, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus containing this and other important information, call 844-ETFs-BUY (844-383-7289) or visit here. Read the prospectus carefully before investing.
Fund Risk: There are risks associated with investing including possible loss of principal. Commodities generally are volatile and are not suitable for all investors. There can be no assurance that the Fund’s investment objective will be met at any time.  The commodities markets and the prices of various commodities may fluctuate widely based on a variety of factors. Because performance is linked to the performance of highly volatile commodities, investors should consider purchasing shares of the Fund only as part of an overall diversified portfolio and should be willing to assume the risks of potentially significant fluctuations in the value of the Fund.
The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Index. The Fund will generally seek to hold similar interests to those included in the Index and will seek exposure to many of the commodities included in the Index under the same futures rolling schedule as the Index. The Fund will also hold short-term fixed-income securities, which may be used as collateral for the Fund’s commodities futures holdings or to generate interest income and capital appreciation on the cash balances arising from its use of futures contracts (thereby providing a “total return” investment in the underlying commodities).
Through holding of futures, options and options on futures contracts, the Fund may be exposed to (i) losses from margin deposits in the case of bankruptcy of the relevant broker, and (ii) a risk that the relevant position cannot be closed out when required at its fundamental value. In pursuing its investment strategy, particularly when rolling futures contracts, the Fund may engage in frequent trading of its portfolio of securities, resulting in a high portfolio turnover rate.
As a “non-diversified” fund, the Fund may hold a smaller number of portfolio securities than many other funds. To the extent the Fund invests in a relatively small number of issuers, a decline in the market value of a particular security held by the Fund may affect its value more than if it invested in a larger number of issuers. The value of shares may be more volatile than the values of shares of more diversified funds.
During situations where the cost of any futures contracts for delivery on dates further in the future is higher than those for delivery closer in time, the value of the Fund holding such contracts will decrease over time unless the spot price of that contract increases by the same rate as the rate of the variation in the price of the futures contract. The rate of variation could be quite significant and last for an indeterminate period of time, reducing the value of the Fund.
Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary are organized, respectively, could result in the inability of the Subsidiary to operate as intended and could negatively affect the Fund and its shareholders.
To the extent the Fund is exposed directly or indirectly to leverage (through investments in commodities futures contracts) the value of that Fund may be more volatile than if no leverage were present.
In order to qualify for the favorable U.S. federal income tax treatment accorded to a regulated investment company (“RIC”), the Fund must derive at least 90% of its gross income in each taxable year from certain categories of income (“qualifying income”) and must satisfy certain asset diversification requirements.  Certain of the Fund’s investments will not generate income that is qualifying income.  The Fund intends to hold such commodity-related investments indirectly, through the Subsidiary. The Fund believes that income from the Subsidiary will be qualifying income because it expects that the Subsidiary will make annual distributions of its earnings and profits.  However, there can be no certainty in this regard, as the Fund has not sought or received an opinion of counsel confirming that the Subsidiary’s operations and resulting distributions would produce qualifying income for the Fund.  If the Fund were to fail to meet the qualifying income test or asset diversification requirements and fail to qualify as a RIC, it would be taxed in the same manner as an ordinary corporation, and distributions to its shareholders would not be deductible by the Fund in computing its taxable income.
Investors buy and sell shares on a secondary market (i.e., not directly from Trusts). Only market makers or “authorized participants” may trade directly with the Trusts, typically in blocks of 25k to 100k shares.  
Bloomberg®, Bloomberg Commodity Index Total Return^SM and Bloomberg Commodity Index 3 Month Forward Total Return^SM are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by abrdn Inc.  Bloomberg is not affiliated with abrdn Inc. and Bloomberg does not approve, endorse, review, or recommend abrdn Bloomberg All Commodity Strategy K-1 Free ETF and abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF.  Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to Bloomberg Commodity Index Total Return^SM and Bloomberg Commodity Index 3 Month Forward Total Return^SM. 
The statements and opinions expressed are those of the author and are as of the date of this report. All information is historical and not indicative of future results and subject to change. Reader should not assume that an investment in any securities and/or precious metals mentioned was or would be profitable in the future. This information is not a recommendation to buy or sell. Past performance is not a guide to future results.
The abrdn Silver ETF Trust, abrdn Gold ETF Trust, abrdn Platinum ETF Trust, abrdn Palladium ETF Trust and abrdn Precious Metals Basket ETF Trust are not investment companies registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act. Shares of the Trusts are not subject to the same regulatory requirements as mutual funds. These investments are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility.
Commodities generally are volatile and are not suitable for all investors. Please refer to the prospectus for complete information regarding all risks associated with the Trusts.
The value of the Shares relates directly to the value of the precious metal held by the Trust and fluctuations in the price could materially adversely affect investment in the Shares. Several factors may affect the price of precious metals, including: A change in economic conditions, such as a recession, can adversely affect the price of the precious metal held by the Trust. Some metals are used in a wide range of industrial applications, and an economic downturn could have a negative impact on its demand and, consequently, its price and the price of the Shares; Investors’ expectations with respect to the rate of inflation; currency exchange rates; interest rates; Investment and trading activities of hedge funds and commodity funds; and global or regional political, economic or financial events and situations. Should there be an increase in the level of hedge activity of the precious metal held by the Trust or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the shares.  Should there be an increase in the level of hedge activity of the precious metal held by the Trust or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the shares.
Also, should the speculative community take a negative view towards the precious metal held by the Trusts, it could cause a decline in prices, negatively impacting the price of the shares. There is a risk that part or all of the Trusts’ physical precious metal could be lost, damaged or stolen. Failure by the custodian or sub-Custodian to exercise due care in the safekeeping of the precious metal held by the Trusts could result in a loss to the Trusts.
The Trusts will not insure its precious metals and shareholders cannot be assured that the custodian will maintain adequate insurance or any insurance with respect to the precious metals held by the custodian on behalf of the Trust. Consequently, a loss may be suffered with respect to the precious metal that is not covered by insurance. Commodities generally are volatile and are not suitable for all investors.
Diversification does not eliminate the risk of experiencing investment losses.
This material must be accompanied or preceded by the prospectus. Carefully consider each Trust’s investment objectives, risk factors, and fees and expenses before investing. To view the prospectus, please click here – abrdn Silver ETF Trust, abrdn Gold ETF Trust, abrdn Platinum ETF Trust, abrdn Palladium ETF Trust and abrdn Precious Metals Basket ETF Trust.
ALPS Distributors, Inc. is the marketing agent.  ALPS is not affiliated with Aberdeen.

EFS000670  5/1/27
AA-060426-206369-1