Invesco's commodity ETFs

Commodities can play several roles in a portfolio with the potential for diversification, inflation hedging and growth opportunities.

We've launched the first Article 8 broad commodity UCITS ETF

Low-carbon strategies are common in equity and fixed income investing, using corporate emissions to weight or select securities. Commodities present a greater challenge, however, because they have multiple producers, various processes and delivery methods, to name a few. Incorporating environmental considerations into a commodity fund requires a different approach.

Our Invesco Bloomberg Commodity Carbon Tilted UCITS ETF tracks a novel index that tilts weightings towards those commodities with lower greenhouse gas (GHG) emissions in their production process, relative to other commodities within their sector, whilst reducing exposure to those with higher GHG emissions.

Cost-efficient access to commodities

We offer a range of broad commodity ETFs and single commodity ETCs, including the largest physical gold product and the largest ETF tracking the flagship Bloomberg Commodity Index (BCOM) in Europe.1

  • Our ETF tracks an index comprised of the same 24 commodities as the standard BCOM index but adjusts allocation to each commodity based on the amount of greenhouse gas (GHG) emissions per unit of production, whilst maintaining similar weightings at the overall sector level compared to the standard BCOM index.

    Our ETF tracks the highly liquid and diversified BCOM, one of the most popular broad commodity indices, covering up to 24 eligible agriculture, livestock, metals and energy-related commodities.

    Our ETF tracks the Bloomberg Commodity ex-Agriculture and Livestock 20/30 capped Index, comprised of 13 commodities across energy, industrial metals, and precious metals.

    Our ETF offers high quality and tradable exposure to global commodity markets by tracking the Solactive Commodity Composite Index. The index comprises a minimum of three constituent indices (it currently includes four 2nd generation broad commodity indices).

  • Secured by gold bullion, our ETC provides one of the lowest overall cost exposures to the gold price in Europe, enabling you to gain exposure to gold price movements without having to buy and store physical gold yourself. Our ETC aims to hold only gold that has been sourced post-2012, in adherence to the LBMA’s Responsible Gold Guidance.

    Our ETCs offer you exposure to either the spot silver, platinum or palladium price through certificates backed by bullion of the underlying precious metals, which are secured in J.P. Morgan Chase Bank’s London Vaults.

Investment risks

  • Please view the product information below in conjunction with the investment risks.

    Applies to all broad commodity ETFs and precious metal ETCs: Value Fluctuation, Commodities.
    All ETFs in the Invesco Broad Commodity ETF range: Synthetic ETF Risk, Use of Derivatives for Index Tracking.
    Invesco Bloomberg Commodity UCITS ETF Eur hdg only: Currency Hedging – ETFs.
    All ETCs in the Invesco Precious Metal ETC range only: Limited Recourse.
    Invesco Physical Gold EUR hedged ETC and Physical Gold GBP hedged ETC only: Currency Hedging – ETCs.
    Invesco Bloomberg Commodity Carbon Tilted UCITS ETF only: New Commodity Risk, GHG Emissions Risk.

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Why Invesco for commodities?

We’ve been managing commodity ETFs since 2006 and are one of the leading providers of commodity exchange traded products globally. Our ETPs are managed by a seasoned team of commodity portfolio managers, with an average industry experience of over 20 years.

 

Explore the latest commodity ETF insights

  • ETC
    Invesco%20monthly%20gold%20update
    ETC

    Monthly gold update

    By Invesco

    The gold price rose by 2.5% in April; the metal again broke multiple price records. We believe the key drivers for the upward trend in the gold price remain intact. Discover insights into the key macro events and what we think you should be keeping your eyes on in the near term.

    May 9, 2024
  • ETC
    An%20introduction%20to%20commodities
    ETC

    An introduction to commodities

    By Invesco

    The most popular way most investors gain exposure to commodities is through exchange-traded products. You can gain exposure to a single commodity’s price via an exchange-traded commodity (ETC) or to a basket of commodities, such as those represented by the BCOM Index, via an ETF.

    September 15, 2023

Commodity FAQs

Commodities are generally raw materials and can be grouped into energy (e.g. crude oil, natural gas), metals (e.g. gold, aluminium, copper) and agricultural commodities (e.g. corn, cotton, live cattle).

Commodity indices typically measure commodity futures performance. Futures are contracts to receive (or deliver) commodities at a specified future date and price. 

Direct (physical) investing in many commodities is challenging for many reasons, e.g. cost of storage, delivery, and so on. So, by investing in futures contracts, you can gain exposure to commodities without having to own the physical underlying asset and the difficulties that come with it. 

A 1st generation index, like BCOM, uses the most actively traded front month futures (holds a single future until expiry and then rolls into a new future) contracts to gain exposure to each commodity. A 2nd generation index may invest in other delivery months, with the objective of minimising ‘roll costs’. 

As measured by inflation beta3 from 1998 to 2022, commodities are historically the most efficient hedge for inflation of any major asset class, even when compared to common inflation-fighting instruments, like Treasury Inflation-Protected Securities (TIPS),4 real estate investments trusts (REITs), 5 and gold.6 This is because commodities are raw materials used as inputs in housing, transportation and food – all components of the CPI. In addition, inflation shocks are usually the by-product of stronger-than-expected demand and/or supply uncertainty, all of which may boost the price of goods.

Given the global reach of commodities, commodity prices have many drivers. However, some of the key influencing factors include:

  • Global economic health: The health of the global economy can directly impact the supply and demand of commodities, influencing prices. In particular, developments in China and the US often have an outsized influence as they are the world’s two largest global economies by gross domestic product (GDP), which measures the total value of a country's finished goods and services.

  • Green transition and climate volatility: Contrary to popular belief, the energy transition/decarbonisation trend is supportive of commodity prices. Metals, like copper, aluminium, zinc and nickel are playing a significant role in the transition to renewable energy, yet efforts to reduce carbon emissions are significantly constraining supplies. This combination of growing demand and tightening supply could potentially create sustained global deficits in the metals sector for years — possibly decades — to come.

    The growing application of environmental, social, and governance (ESG) considerations in investment solutions has also led to significant underinvestment in fossil fuels, such as oil and gas, stunting supply growth while global demand continues to climb. Extreme weather events may continue to upend supplies in the agricultural sector. Furthermore, there may be increased demand for agricultural commodities to be used as ‘energy crops' for ethanol and biodiesel.

  • Geopolitics: Rising geopolitical tension, especially between significant players in this market, can lead to heightened uncertainty and volatility for prices, as we saw play out following Russia’s invasion of Ukraine. Tensions between the US and China have also been rising, which could potentially rewrite existing global trade routes.

Greenhouse gases (GHG) are naturally occurring in the atmosphere, which absorbs and re-emits heat, contributing to the warming of the earth. Examples include carbon dioxide and methane. Carbon is a chemical element that is present in many, but not all, greenhouse gases. For the purposes of analysing what investors understand as the ‘carbon footprint’ of a commodity portfolio, GHG emissions data provides a representative metric. 

These are physically backed exchange traded certificates (ETCs) that can be bought and sold on exchange. Certificates in the ETCs are a type of debt instrument and are secured by a pool of collateral (the underlying precious metal), which is held on trust by the trustee for itself, the certificate holders and other parties.

Footnotes

  • 1 Invesco, as at 30 June 2023.

    2 Invesco, as at 30 June 2023.

    3 Inflation beta is a metric used to evaluate an asset class’s ability to hedge inflation. It measures the change in inflation against the return of the asset class over a specific time period.

    4 The value of inflation-linked securities will fluctuate in response to changes in real interest rates, generally decreasing when real interest rates rise and increasing when real interest rates fall. Interest payments on such securities generally vary up or down along with the rate of inflation. Real interest rates represent nominal (or stated) interest rates reduced by the expected impact of inflation.

    5 REITs are pooled investment vehicles that trade like stocks and invest substantially all their assets in real estate and may qualify for special tax considerations. REITs are subject to risks inherent in the direct ownership of real estate. A company’s failure to qualify as a REIT under federal tax law may have adverse consequences for the REIT’s shareholders. REITs may have expenses, including advisory and administration, and REIT shareholders will incur a proportionate share of the underlying expenses.

    6 Sources: Bloomberg L.P. and US Bureau of Labor Statistics, as of December 2022.

Investment risks

  • For complete information on risks, refer to the legal documents.

    Value fluctuation:
    The value of investments, and any income from them, will fluctuate. This may partly be the result of changes in exchange rates. Investors may not get back the full amount invested.

    Commodities: Instruments providing exposure to commodities are generally considered to be high risk which means there is a greater risk of large fluctuations in the value of the instrument.

    For all ETFs in the Invesco Broad Commodity ETF range

    Synthetic ETF Risk: The fund might purchase securities that are not contained in the reference index and will enter into swap agreements to exchange the performance of those securities for the performance of the reference index.

    Use of derivatives for index tracking: The Fund’s ability to track the benchmark’s performance is reliant on the counterparties to continuously deliver the performance of the benchmark in line with the swap agreements and would also be affected by any spread between the pricing of the swaps and the pricing of the benchmark. The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss.

    For the Invesco Bloomberg Commodity UCITS ETF Eur hdg only

    Currency Hedging - ETFs: Currency hedging between the base currency of the Fund and the currency of the share class may not completely eliminate the currency risk between those two currencies and may affect the performance of the share class.

    For all ETCs in the Invesco Precious Metal ETC range only

    Limited recourse: If the issuer cannot pay the specified return, the proceeds from the sale of the precious metal will be used to repay investors. Investors will have no claim on the other assets of the issuer.

    For the Invesco Physical Gold Euro Hedged ETC and Invesco Physical Gold GBP Hedged ETC only

    Currency hedging - ETCs: Currency hedging between the currency in which the underlying precious metal is typically quoted and the currency of the certificates may not completely eliminate the currency fluctuations between those two currencies and may affect the performance of the certificates.

    For the Invesco Bloomberg Commodity Carbon Tilted UCITS ETF only

    New commodity risk: Exposure to commodities might result in the Fund being more impacted by natural disasters and tariffs or other regulatory developments. This may result in large fluctuations in the value of the Fund.

    GHG Emissions risk: The Fund may perform differently to other commodity funds, such as underperforming in comparison to other commodity funds that do not seek to weight commodity futures based on their respective GHG Emissions

Important information

  • Data as at 31 July 2023, unless otherwise stated.

    By accepting this document you consent to communicating with us in English, unless you inform us otherwise.

    For more information on our funds and the relevant risks, please refer to the share class-specific Key Information Documents/Key Investor Information Documents (available in local language), the Annual or Interim Reports, the Prospectus, and constituent documents, available from www.invesco.eu. A summary of investor rights is available in English from www.invescomanagementcompany.ie. The management company may terminate marketing arrangements.

    All investment decisions must be based only on the most up to date legal offering documents. The legal offering documents (Key Information Document (KID), Base Prospectus and annual & semi-annual reports) are available free of charge at our website etf.invesco.com and from the issuers.

    This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. Views and opinions are based on current market conditions and are subject to change.

    UCITS ETF’s units / shares purchased on the secondary market cannot usually be sold directly back to UCITS ETF. Investors must buy and sell units / shares on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units / shares and may receive less than the current net asset value when selling them.

    The Invesco Commodity Composite UCITS ETF is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Solactive Commodity Composite Index and/or Index trade mark or the Index Price at any time or in any other respect. The Index is calculated and published by Solactive AG.

    Bloomberg Commodity Total Return Index, Bloomberg ex-Agriculture and Livestock 20/30 Capped Total Return Index and “Bloomberg®” are service marks of Bloomberg Finance L.P. and its affiliates (collectively, “Bloomberg”) and have been licensed for use for certain purposes by Invesco. Neither Bloomberg nor UBS Securities LLC and its affiliates (collectively, “UBS”) are affiliated with Invesco, and Bloomberg and UBS do not approve, endorse, review, or recommend the ETF. Neither Bloomberg nor UBS guarantees the timeliness, accurateness, or completeness of any data or information relating to the Bloomberg Commodity Total Return Index, Bloomberg ex-Agriculture and Livestock 20/30 Capped Total Return Index.

    “Bloomberg®” and “Bloomberg Commodity Carbon Tilted IndexSM“ 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 Invesco UK Services Limited (“Invesco”). Bloomberg is not affiliated with Invesco, and Bloomberg does not approve, endorse, review, or recommend Invesco Bloomberg Commodity Carbon Tilted UCITS ETF. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to Bloomberg Commodity Carbon Tilted Index.

    For the full objectives and investment policy please consult the current prospectus.

    The publication of the supplement in Italy does not imply any judgment by CONSOB on an investment in a product. The list of products listed in Italy, and the offering documents for and the supplement of each product are available: (i) at etf.invesco.com (along with the audited annual report and the unaudited half-year reports); and (ii) on the website of the Italian Stock Exchange borsaitaliana.it.

    No action has been taken or will be taken in Israel that would permit a public offering of the Fund or distribution of this document to the public in Israel. This Fund has not been approved by the Israel Securities Authority (the ISA). Accordingly, the Fund shall only be sold in Israel to an investor of the type listed in the First Schedule to the Israeli Securities Law, 1968, which has confirmed in writing that it falls within one of the categories listed therein (accompanied by external confirmation where this is required under ISA guidelines), that it is aware of the implications of being considered such an investor and consents thereto, and further that the Fund is being purchased for its own account and not for the purpose of re-sale or distribution. This document may not be reproduced or used for any other purpose, nor be furnished to any other person other than those to whom copies have been sent. Nothing in this document should be considered investment advice or investment marketing as defined in the Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 1995 (“the Investment Advice Law”). Investors are encouraged to seek competent investment advice from a locally licensed investment advisor prior to making any investment. Neither Invesco Ltd. Nor its subsidiaries are licensed under the Investment Advice Law, nor does it carry the insurance as required of a licensee thereunder. This document does not constitute an offer to sell or solicitation of an offer to buy any securities or fund units other than the fund offered hereby, nor does it constitute an offer to sell to or solicitation of an offer to buy from any person or persons in any state or other jurisdiction in which such offer or solicitation would be unlawful, or in which the person making such offer or solicitation is not qualified to do so, or to a person or persons to whom it is unlawful to make such offer or solicitation.

    This material is intended only for professional investors and may not be used for any other purpose nor passed on to any other investor in Belgium.

    German investors may obtain the offering documents free of charge in paper or electronic form from the issuer or from the German information and paying agent (Marcard, Stein & Co AG, Ballindamm 36, 20095 Hamburg, Germany).

    The representative and paying agent in Switzerland is BNP PARIBAS, Paris, Zurich Branch, Selnaustrasse 16 8002 Zürich. The Prospectus, Key Information Document, and financial reports may be obtained free of charge from the Representative. The ETFs are domiciled in Ireland. 

    This document has been communicated by Invesco Investment Management Limited, Ground Floor, 2 Cumberland Place, Fenian Street, Dublin 2, Ireland, Invesco Management S.A., President Building, 37A Avenue JF Kennedy, L-1855 Luxembourg, regulated by the Commission de Surveillance du Secteur Financier, Luxembourg. Invesco Asset Management Deutschland GmbH, An der Welle 5, 60322 Frankfurt am Main, Germany. Invesco Asset Management (Schweiz) AG, Talacker 34, 8001 Zurich, Switzerland. Invesco Asset Management Limited, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire, RG9 1HH, United Kingdom. Authorised and regulated by the Financial Conduct Authority.

    EMEA3045915 /2023