I am looking to invest in an ETP to get exposure on Commodities market.

In order to do this I am looking for an Index with following requirements:

  1. Broad diversification across commodities (potentially all commodities included)
  2. I would like to AVOID the underlying holdings to be futures contracts (in order to avoid my yields to be linked with rolling process).

said that I am based in EU so the related ETP should be available here.

thank you for comments and help

  • Futures contracts are the standard way to trade commodities (financially at least) - if you don;t want them to hold futures what do you want them to hold? What exactly about the trolling process are you averse to? – D Stanley Feb 3 '20 at 14:01
  • 1
    @DStanley fantastic typo there! – MD-Tech Feb 4 '20 at 8:32

An etf or fund that had to physically store and redeem a wide range of commodities would be both extremely expensive and completely impracticable in many cases. Are you just going to buy and hold physical pork bellies or orange juice for a decade for example? Who is going to buy 10 year old frozen foodstuff with a dubious storage history when you want to sell? Where are you going to store vast quantities of copper or oil or silver cheaply and securely and so on and so on.

Alongside products like an ETF holding commodity company stocks and shares, contracts are basically the only practical game in town to gain exposure to these assets without buying a warehouse and starting to pile it all up yourself.

  • Why couldn't there be an ETF holding futures? – user253751 Feb 3 '20 at 15:48
  • There are certainly physical silver ETPs (e.g PHAG.L). There did used to be a physical copper one PHCU.L but it seems to have been discontinued in 2014 and I'm not sure if it's been tried again. (Copper is typically 20% the cost of silver so would need ~5 times as much space to store the same value.) Maybe gives some idea of where the bounds of practicality are. – timday Feb 3 '20 at 15:53

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