Stocks leveraged to the battery metals thematic have taken off, while investors have also identified various base metals as having a role to play. Meanwhile, agriculture and forestry practices are coming into light, not just because of ESG concerns, but on the back of soaring inflation across the world. And demand for iron ore hasn't slowed down either.

From lithium to cobalt, nickel, copper, timber and everything else in between, commodities have been one of the standout themes over the last couple years. With ETFs providing a diversified and low-cost means to broadly invest in commodities at large, here are some of the most-popular ETFs that offer exposure to battery metals, base metals and agriculture.

Battery metals

The section of the commodities market with the most growth over the last two years, interest in battery metals has exploded in light of the transition towards renewables and ambitious electric vehicle targets. 

Many investors have been keen to invest directly in ASX-listed players in the battery metals space, however, the development of ETFs in this emerging sector has also provided an opportunity to back a basket of commodities and tech behind the battery metals supply chain.

Launched in 2018, ETFS Battery Tech & Lithium ETF (ASX: ACDC) offers investors exposure to the energy storage and production megatrend, which includes stocks that are actively involved in the battery metals supply chain and associated technology.

Although ACDC is a well-known ASX ETF, there are a host of US-listed ETFs in this space that are also soaring in popularity, led by the Global X Lithium & Battery Tech ETF (NYSE: LIT), with nearly US$5 billion in net assets focused on lithium industry pioneers, but also including the VanEck Rare Earth/Strategic Metals ETF (NYSE: REMX) and Amplify Lithium & Battery Technology ETF (NYSE: BATT).

Base metals and iron ore

The rally in iron ore prices has been a major geopolitical talking point in recent times, with China seeking to gain some control over commodity prices that it argues are being fuelled by speculation. Investors in iron ore stocks have done well by backing the major miners in this space, but there are also other avenues to gain exposure to the commodity and industry.

One opportunity is the VanEck Steel ETF (NYSE: SLX), which instead of tracking iron ore directly, invests in global companies that are involved in the steel industry. There is a particular tilt towards US-based steel producers, but as much as two-thirds of the ETF focuses on global markets ex-US, where companies from developed markets and emerging markets are included in the fund.

For those with a little more risk appetite, there is an iron ore futures ETF listed on the Hong Kong Stock Exchange. The SSIF DCE Iron Ore Futures Index ETF (HK: 3047) tracks the Dalian Commodity Exchange Iron Ore Futures Price Index, investing directly in renminbi-denominated, front-month iron ore futures contracts traded on China Dalian Commodity Exchange. As a futures-driven ETF, this is a highly complex product designed for experienced investors.

Among other metals, soaring copper prices have underpinned the rally in the Global X Copper Miners ETF (NYSE: COPX). The US$2 billion-plus fund offers pure-play copper exposure, tracking a market-cap-weighted index focusing on the global copper mining industry, albeit with an emphasis on North America.

For an all-in-one option, the Invesco DB Base Metals ETF (NYSE: DBB) offers exposure to a basket of base metals, including copper, zinc, and aluminium, however, this is another ETF that invests in futures contracts, so has particularly complex and risky considerations to take into account.

Agriculture and timber

With inflation proving a major driver of consumer prices over the last year, particularly in regions like the US and Europe, many investors have been honing in on agricultural products as means to hedge the risk of inflation.

On the ASX, the BetaShares Global Agriculture Companies ETF - Currency Hedged (ASX: FOOD) offers exposure to the performance of the largest global agriculture companies by market capitalisation outside of those listed locally, and hedged into Australian dollars. The Invesco DB Agriculture Fund (NYSE: DBA), with over US$1.2 billion in assets under management, is arguably the most-popular US-listed ETF for achieving exposure to agricultural commodities, with the fund investing in a diversified basket of agricultural natural resources.

On the other hand, if you are looking at a specific resource, Teucrium is one of the more active fund managers in this space providing exposure to the likes of corn (Teucrium Corn Fund - NYSE: CORN), wheat (Teucrium Wheat Fund - NYSE: WEAT), and soybeans (Teucrium Soybean Fund - NYSE: SOYB), among other agricultural goods. 

More broadly in terms of forestry, the iShares Global Timber & Forestry ETF (NYSE: WOOD), with over US$300 million in net assets, provides investors an opportunity to invest in a concentrated selection of stocks from the global timber industry, which has historically acted as an inflation hedge due to rising prices.

Important ETF considerations

ETFs are not without their own risks. It is important that you consider the following when deciding if an ETF is appropriate for you.

• Read the Fund Manager Product Disclosure Statement

• Make sure you understand all the fees associated with an ETF

• Review the investment criteria, thesis and strategy of each ETF to ensure it fits your goals

• Look at the underlying holdings and rules governing the ETF, including the weight of holdings

• Pay attention to the target and structure of the ETF - this might include what index the fund seeks to track or outperform, the use of leverage, futures, and the like

• Remember, a commodity or resources-oriented ETF may actually concentrate your investment exposure, and a downturn in that sector could have a magnified effect on your portfolio

And lastly, there are also natural resources ETFs like the SPDR S&P Global Natural Resources ETF (NYSE: GNR) and FlexShares Morningstar Global Upstream Natural Resources Index Fund (NYSE: GUNR) that offer broad-based exposure to a basket of commodities, including not only battery metals, base metals and agriculture, but also energy and precious metals.