Beyond the Spot Price: The Changing Landscape of Commodity ETFs

Historically investors have bought physical commodity ETFs to gain direct exposure to the spot price of real assets. These funds provide a straightforward way to hedge against inflation and market volatility without the burden of physically storing the assets or the structural yield drag associated with futures contracts. Despite the abundance of established physical commodity ETFs already trading, numerous firms continue to launch new ways to gain commodity exposure driven by persistent inflation concerns and ongoing geopolitical uncertainty.

Investors can choose between established heavyweights like GLD and IAU, which offer high liquidity and deep options markets for active traders, or lower-cost alternatives like GLDM and IAUM for long-term holdings. Even though physical gold ETFs have faced a 6% decline in 2026 due to hawkish Federal Reserve stance on inflation and geopolitical tensions, new funds like the Y’all Street Physical Gold ETF (YSAU) continue to launch. YSAU has differentiated itself as the first such fund to store all of its holdings domestically. The commodity ETF landscape is evolving beyond simple spot-price tracking. Funds such as the Texas Capital Oil Index ETF (OILT) provide indirect exposure by tracking regional equities. This demonstrates the variety of ways to access these sectors.

When investors want straightforward protection against macroeconomic volatility, they typically turn to established physical commodity funds such as the SPDR Gold MiniShares Trust (GLDM) and the iShares Gold Trust Micro (IAUM). These funds offer low cost exposure to the same physical gold tracked by the industry heavyweights SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU).

The funds physically store gold managed by custodian banks. GLD stores its gold in London, New York, and Zurich. HSBC Bank and JPMorgan primarily manage the fund. IAU stores gold in New York, London, and Toronto and is also managed by JPMorgan. GLD and IAU are oriented toward active traders who need tight bid-ask spreads, deep options markets, and high trading volumes. These additional benefits come with higher expense ratios of 40 basis points for GLD and 25 basis points for IAU. For investors who prioritize long-term gains over premium liquidity, GLDM and IAUM offer lower expense ratios of 10 basis points and 9 basis points, respectively. These funds are structured with much lower share prices than their higher-volume counterparts. This makes them easier for the average investor to trade without the need for fractional share support.

Physical gold ETFs have faced a pullback in 2026. Following a strong performance in 2025, a hawkish stance on interest rates from the Federal Reserve and geopolitical tensions have led to year-to-date losses in many physical gold ETFs. Both GLDM and IAUM have declined approximately 6% in 2026, with GLDM seeing inflows of $4.28 billion and IAUM recording inflows of $829.19 million over the same period.

Despite spot gold seeing declines this year, numerous firms continue to launch new physical gold funds. Y’all Street recently launched the Y’all Street Physical Gold ETF (YSAU), with an expense ratio of 24 basis points. Unlike other gold funds, YSAU stores 100% of the physical gold backing the ETF on American soil. Gold bars are kept in a secure vault by Texas Precious Metals, located near Shiner, Texas. By keeping all gold reserves domestically held, the fund eliminates the need to rely on foreign custodians.

While physical gold ETFs track a single global commodity, funds such as the Texas Capital Oil Index ETF (OILT) function entirely differently, focusing on regional equities within Texas. OILT does not physically hold barrels of oil or track the commodity’s spot price. Rather, it tra...