ETF Securities: Commodity ETC Assets Triple Over Past 12 Months To $17bn As Demand For Gold, Energy, Agriculture And Other Hard Assets Surge

• Record breaking year for commodity ETCs, with assets up over $11bn to $17bn
• ETCs tracking agriculture and industrial metals show highest buy/sell ratio
• Physically-backed precious metal holdings - gold, silver, platinum, palladium - reach historic highs
• ETFS Copper (COPA) up 118% in 2009 to end-November, the best performing ETC, followed by ETFS Physical Palladium (PHPD) up 96% and ETFS Zinc (ZINC) up 81%
• ETFS Industrial Metals (AIGI) best performing commodity basket in 2009, up 67% YTD
• ETFS Forward All Commodities DJ-UBSCI-F3SM (FAIG) up 268% over the past 10 years, the top performing major asset class over the period

Commodities bounced back strongly this year following the recent credit crisis, with ETFS Forward All Commodities DJ-UBSCI-F3SM (FAIG) up 20% year-to-date and 268% over the past 10 years based on data to the end of November. ETFS Industrial Metals (AIGI) was the best performing ETC, with YTD growth of 67%. Industrial metals significantly outperformed developed market equities, outperforming the Dow Jones Euro STOXX 50 by 37 percentage points since the start of 2009. Industrial metals have also outperformed bonds, cash and real estate over the same period as the global recovery has become more entrenched and market appetite for plays on the recovery has accelerated. The precious metals sub-sector was the next best performing major sector, with ETFS Physical Silver (PHAG), ETFS Physical Platinum (PHPT) and ETFS Physical Palladium (PHPD) all returning over 60% YTD.

Commodities remain the best performing major asset class over a 10 year horizon, with ETFS Forward All Commodities DJ-UBSCI-F3SM (FAIG) registering cumulative growth of 268%, compared to a 10% rise in the Dow Jones Euro STOXX 50, a 13% rise in the FTSE 100, a 6% rise in property1 and 75% return on bonds2. This outperformance was achieved with lower average annual volatility than equities over the same period (see table below).

Asset Class Returns Compared (YTD, and Past 10 years)

2009 has been a record breaking year for commodity inflows, with assets under management (AUM) in ETF Securities' ETCs and ETFs rising over $11 billion to $17 billion over the past 12 months. Physical gold and long natural gas ETCs have seen the largest investment demand YTD, with inflows of $2 billion and $1 billion respectively since the start of 2009.

In terms of investor positioning, agriculture ETCs such as ETFS Agriculture DJ-UBSCISM (AIGA) had the highest buy/sell ratio of any sector in the 11 months ended November with a ratio of 3.2. This is consistent with steady inflows into agriculture ETCs in 42 of the 48 weeks to end-November. Industrial metals had the next strongest buy:sell ratio at 2.7, coinciding with the sharp rise in industrial metal prices in 2009. Although energy ETCs have seen the second largest inflows in 2009 YTD, their buy/sell ratio was one of the lowest at 1.8 as extremely strong oil inflows in the first four months of the year and the surge of inflows into natural gas ETCs since May were partially offset by outflows in May and June from ETCs tracking shorter-dated oil futures returns.

Industrial metals were the strongest performing sector in 2009, up 67% to the end of November. Gains were led by a 118% rise in ETFS Copper (COPA) and an 81% rise in ETFS Zinc (ZINC). ETFS Aluminium (ALUM) remained the weakest of the industrial metals, but still managed a 24% return in the 11 months ended November. Flows into industrial metals accelerated in 2009, taking industrial metal assets to almost twice their previous peak level seen in H1 2008. Robust Chinese demand, coupled with stronger manufacturing activity in developed economies, has underpinned investor interest in industrial metals.

Top 10 Long and Short ETC Performance

* ETFS Lead saw 126% growth based on simulated returns based on the underlying DJ-UBS Lead Sub-IndexSM. This product was listed in November 2009.

Within precious metals, the best performing commodities were metals tied to the industrial cycle, with ETFS Physical Palladium (PHPD) up 96%, ETFS Physical Silver (PHAG) up 68% and ETFS Physical Platinum (PHPT) up 61%. Gold prices reached fresh historic highs in 2009, breaching the $1200/oz mark by the start of December. Interest in physical gold holdings was extremely strong, up 1.9 million ounces (31 %) in the 11 months to the end of November. This marks the second year of rapid growth in physical gold holdings, which have more than doubled (up 4.2 million ounces, or $5 billion at current gold prices) since the start of 2008. Total assets in ETF Securities' physically-backed gold ETCs stood at $9.5 billion by the end of November 2009, making them the largest ETF/ETC holdings in Europe and the second largest ETC/ETF holding in the world. Other physical precious metal ETC holdings also posted new historic highs in 2009, with physically-backed silver, platinum and palladium ETCs seeing their metal holdings (in ounces) reach the highest levels since inception by the end of November.

The energy sector saw mixed performance over 2009, with a 74% rise in ETFS Gasoline (UGAS) and a 44% gain in ETFS Brent 1mth (OILB) offset by a 57% drop in ETFS Natural Gas (NGAS). In H1 2009 sharp falls in oil prices attracted almost $1 billion of inflows into long oil ETCs between January and May. There was some profit taking on these positions subsequently, coinciding with $1.4 billion in inflows into long natural gas ETCs. These flows suggest some rotation in investor positioning within the sector as natural gas prices have underperformed their oil counterparts.

Agriculture saw a sharp divergence in returns with ETFS Softs (AIGS) up 34% in the 11 months to the end of November, compared to a 1% gain in ETFS Grains (AIGG). ETFS Softs were boosted by a 57% rise in ETFS Sugar (SUGA) and a 29% rise in ETFS Cotton (COTN). ETFS Soybeans (SOYB) was up 25% while ETFS Wheat (WEAT) was down 20% and ETFS Corn (CORN) was down 9%. Agriculture saw the most consistent and third largest inflows (behind energy and precious metals in 2009 totalling over $1 billion YTD. Historically low levels of inventories, together with a number of weather-related crop disruptions this season, have helped underpin investment demand in agriculture in 2009.

Nicholas Brooks, Head of Research and Investment Strategy, commenting on the 2009 performance numbers said: "Demand for commodity ETCs has been incredibly strong in 2009. ETF Securities assets under management nearly tripled to $17bn over the past 12 months on the back of strong and steady demand for gold and other physically-backed precious metal ETCs as well as energy, agriculture and industrial metal ETCs. Assets under management are now over 70% higher than they were in July 2008 before the financial crisis broke out. Most of the demand has been for long exposure, with investors' building their holdings of "hard assets" both for their potential price-supportive long-term supply-demand fundamentals, as well as their potential to hedge against inflation and currency debasement risks as government finances deteriorate and central banks keep the liquidity taps open."