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A commodity is an article of commerce and there are investment funds traded on the stock exchanges that invest in these items.  These exchange traded funds hold assets like bonds or stocks and they trade at around the same price as the net asset value of the assets that they hold. An ETF mixes a mutual fund valuation feature with the tradability inherent in a closed-end fund.

Commodities ETFs invest in commodities such as precious metals, energy, and agricultural products. Most of these ETFs attempt to duplicate performance of a specific stock market index. Gold ETFs were one of the first commodities ETFs sold on major stock markets. Since these funds do not invest in securities, they are not subject to investment company regulations within the U.S. under the Investment Company Act of 1940.

Some commodity ETFs, such as SPDR Gold Shares, iShares Silver Trust, ETFS Physical Palladium Shares, and ETFS Physical Platinum Shares, own a supply of the physical commodity they represent. Individuals can invest in ETFs regarding broad commodity indexes, such as Greenhaven Commodity Services Reuters/CRB Commodity Index ETF. The ProShares Ultra Dow Jones-UBS Commodity Index ETF is a leveraged version of this type of investment. Those interested in investing in oil can purchase The United States Heating Oil ETF, LP and in gasoline, The United States Gasoline ETF, LP. They can also purchase ETFs that have natural gas and energy commodity basket holdings.

Those who want to invest in agricultural commodities can invest in ETFs that track the stock of companies in a specific commodity, such as the Claymore/Clear Global Timber ETF or Market Vectors Agribusiness ETF. Alternatively, they can invest in those that track broader agricultural indexes, such as the PowerShares DB Agriculture ETF. One ETF that contains industrial metals baskets is the PowerShares DB Base Metals ETF. There are also ETFs that track the stocks of companies within the industrial commodities industry, like the Market Vectors Coal ETF.

These ETFs trade similar to stock shares, are simple and convenient, and give investors exposure to commodities and the commodity indices. However, investors must understand that things other than the price of the commodity affect the commodity ETF price. Some of these ETFs get exposure to the underlying commodities via futures contracts, which provide additional risks to an investor.