Commodities and precious metals

Why is the structure an ETC?

A product that tracks a single commodity can't be a UCITS ETF, because the rules require a fund to be diversified. That's why products tracking gold or silver almost always use an ETC structure: collateralized debt instruments that are typically backed by physical metal held in custody.

A broader commodity basket, on the other hand, can be an ETF, because it is diversified. So always check which one you're looking at.

Gold · Silver · Platinum · Copper · Energy · Agriculture · Broad commodity basket

Physical or futures-based?

This is the single most important difference in commodities.

The expected return differs from stocks

A commodity produces no cash flow. A stock can pay a dividend and a bond can pay interest, but gold produces nothing: its return comes solely from changes in price.

That's why commodities are usually not used as a portfolio's return engine but as a diversifier: they can move out of step with stocks, which can smooth the swings of the overall portfolio.

This content is for information purposes only and should not be construed as investment advice or a recommendation. Investing always involves the risk of losing capital. The value of financial instruments and investments can go up or down, and past performance is no guarantee of future returns. The calculators and comparisons are illustrative. Gold is not covered by the investor compensation scheme or the deposit guarantee scheme.