When it comes to resilience during times of trouble, commodities can be one of the best places to hide out, especially amid rising prices with inflation. Whether it’s the metals used for everyday products or the food we consume, these commodities hold their value even under inflationary pressures.
So, when it comes to investing during these times, it can be a great idea to take advantage of the situation! And the best way is to invest in commodity exchange-traded funds (ETF). If so, these are the three best ones to consider on the TSX today.
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Base metals
If you want exposure to commodities, base metals can be a great way to gain exposure to all at once. Whether it’s the high price of gold or the demand for copper, investors can gain significant returns from investing in this area.
One way is to invest in iShares S&P/TSX Global Base Metals Index ETF (TSX: XBM). This provides exposure to the performance of global base metal mining companies listed on multiple exchanges. XBM aims to track the performance of the S&P/TSX Global Base Metals Index. This index includes companies involved in the exploration, production, and distribution of base metals such as copper, zinc, nickel, aluminum, and lead.
By investing in XBM, investors gain exposure to a diversified portfolio of base metal mining companies. This diversification can help spread risk across multiple companies and countries within the base metals sector. The ETF holds a mix of large, mid, and small-cap companies engaged in base metal mining activities. XBM provides exposure to base metal mining companies from around the world, including Canada, the United States, Australia, and other countries with significant base metal mining industries.
Shares of the ETF are up 15% year to date as of writing, with a 1.93% dividend yield as well.
Agriculture
Another item we will always need is food. But rather than invest in just fertilizer or just grain, you can gain exposure to it all through an ETF. And in this case, it might be a good idea to consider iShares Global Agriculture Index ETF Common Class (TSX: COW).
COW ETF aims to provide investors with exposure to the performance of the global agriculture sector. It seeks to replicate, to the extent possible, the performance of the MVIS Global Agribusiness Index, net of expenses. It invests in a diversified portfolio of companies involved in various aspects of the agriculture industry, including agricultural chemicals, equipment, seeds, livestock, and food processing.
Not only that, but it provides exposure to agriculture-related companies from around the world, including both developed and emerging markets. This global diversification helps spread risk across different regions and economies. What’s more, the ETF follows a market-capitalization-weighted methodology, where companies with higher market capitalizations have a larger weight in the index. This approach reflects the market value of each company’s outstanding shares.
Shares of COW ETF are up 3% year to date, with a 1.53% dividend yield as of writing.
Seasonal
If you want an ETF that will roll with the changes provided not just through the years, but even though the year, a great option is Horizons Seasonal Rotation ETF Common (TSX: HAC). This ETF offers long-term capital appreciation in all market cycles by tactically allocating exposure during periods that have historically demonstrated seasonal trends.
The ETF provides investors with exposure to the performance of a diversified portfolio of commodities through the use of active management strategies. It seeks to achieve this by investing primarily in commodity futures contracts as well as fixed-income securities and money market instruments. While active management can lead to a higher expense ratio, it can be worth it in this case.
HAC provides exposure to a broad range of commodities, including energy, metals, agriculture, and livestock. The ETF may adjust its commodity exposures based on the fund manager’s tactical views on market conditions, supply and demand dynamics, geopolitical factors, and other relevant considerations.
Shares are up 3.6% year to date with a 1.03% dividend yield as well.
