Exchange traded commodities

If you are looking for the benefits of investing in commodities combined with the ease and efficiency of trading in stocks and shares then look no further than exchange traded commodities (ETCs).

What are ETCs?

ETCs are open-ended securities that provide investors with exposure to a range of commodities and commodity indices. ETCs are listed on the London Stock Exchange (LSE) and are traded and settled exactly like shares. The developed of ETCs was pioneered by ETF Securities with the first listing of an ETC, Gold Bullion Securities in Australia and London in 2003.

You can choose to invest in either:

• Single-commodity ETCs. These can be 100% backed with allocated metal, such as ETFS Physical Gold, or tracking an individual commodity futures based index such as ETFS Wheat and ETFS natural gas, or commodity futures, such as ETFS Brent 1yr
• Index tracking ETCs which reflect the performance of your chosen broad commodity index. Available indices include agriculture (DJ-UBS Agriculture Sub-IndexSM); energy (ETFS Energy DJ-UBSCISM); industrial metals (ETFS Industrial Metals DJ-UBSCISM); softs (ETFS Softs DJ-UBSCISM) and more.

Where ETCs are tracking futures or indices priced off futures, different types of exposure to underlying futures can be provided, i.e.

• Constant exposure to futures 1-3 months out
  ETFS Agriculture DJ-UBSCISM, ETFS Brent 1mth, ETFS Crude Oil, ETFS Precious Metals DJ-UBSCISM, ETFS WTI 2mth
• Constant exposure to futures 4-6 months out
  ETFS Forward Agriculture DJ-UBSCI-F3SM, ETFS Forward Energy DJ-UBSCI-F3SM
  
• Constant exposure to futures 1 year and further out
  ETFS Brent 1yr, ETFS WTI 2yr, ETFS Brent 3yr.

Special Notice about Leveraged and Inverse Exchange Traded Commodities
There are leveraged and inverse (or short) ETC products available from some providers within the full range of ETCs available to UK retail investors. Potential investors should be aware of the nature of these products and the risks involved. Find out more about leveraged and inverse ETCs

You should remember that the value of ETCs can fall as well as rise and you should be prepared to lose your investment. These investments may not be suitable to all investors.

You should be aware that the counterparty risk for ETCs varies between:

• those that are physically-backed i.e. where the products are 100% backed by allocated bullion held with HSBC (the actual physical metal itself is held in safe custody) and therefore carry no credit risk to those which are 100% backed by collateral i.e. where collateral (an asset that has been pledged as a security for the product) is held with the Bank of New York Mellon in a separate account and is adjusted daily
• and those which are backed by Shell, where investors are taking on Shell credit risk when they invest in a product. See a summary table of the different levels of counterparty risks that can apply to ETCs.

 

Benefits of ETCs

• Gain direct exposure to commodity prices
• They have guaranteed liquidity – trade in them intraday, every day
• No stamp duty
• Transparent and accurate pricing – pay a dealing commission and nothing else
• Eligible to hold within your Barclays Stockbrokers Investment ISA or SIPP.
  

Why invest in ETCs?

ETCs provide you with simple access to what was previously a notoriously difficult area to invest in. Trading in ETCs combines the benefits of direct exposure to commodities with the security of indirect exposure. This means you can gain access to commodities without the risk of trading futures or taking physical delivery of products.

ETCs can be suitable for both the large institutional investor as well as the smaller private investor. They can be combined with your existing portfolio and adapted to suit your short or long term investment strategies. It really depends on the specific requirements of the individual investor and those unsure should seek professional advice.

Get trading in ETCs

Already a client? - If you already have an account with us login and select the deal tab to trade or visit the research centre for more latest prices, charts and news.

ETCs research and prices - Whilst logged in, visit the research centre and type ‘ETFS’ into the search box for a list of all available ETCs. Click on the name of the commodity you are interested in for the epic code (ticker) e.g. ETFS Coffee (COFF), detailed research and current pricing.

New to Barclays Stockbrokers? - Open an account today and get trading online from just £6.95 per online trade when you trade 25 times or more in a calendar month, and £9.95 for between 15 and 24 trades; otherwise it is £12.95.

You can access ETCs from our trading accounts or, if you’re looking for a tax shelter for your investments, you can hold your ETCs in our Investment ISA and SIPP accounts.

 

• Login and trade ETCs today