- Last week saw largest weekly inflows into ETCs for past 19 weeks
- ETCs experience net inflows for each of past 3 weeks
- $175m flows into physically backed gold and platinum ETCs
- $33m of inflows into oil ETCs last week, $93 million in the past 4 weeks
- Flows into short and leveraged ETCs indicate positive outlook
ETF Securities Limited (ETFS), the global pioneer of Exchange Traded Commodities (ETCs), and provider of Exchange Traded Funds (ETFs) has seen strong inflows into ETCs last week. Net inflows of $185 million were experienced across a range of ETCs including precious metals, energy and industrial metals. Net inflows into ETCs have occurred for the past three weeks. The inflows are a result of changing investor sentiment across a number of commodities. In addition, the collateralisation of the full value of over 120 ETCs has significantly reduced the credit exposure of ETCs issued by ETFS Commodity Securities Limited.
ETCs recorded $185 million of inflows last week as investors returned to ETC trading despite the Thanksgiving holiday in the US when lower volumes are usually expected. ETFS Physical Gold (PHAU) experienced $140 million of inflows which was the largest inflow into physically backed gold ETCs of the past seven weeks. The Price of PHAU ended the week at $80.99, up 10.4% since Thursday 20 November - each PHAU represents 0.0994 ounces of physical gold. For every physically backed security issued, a matching amount of allocated physical precious metal is deposited with the Custodian, HSBC. In total, physical gold ETCs have experienced $1,640 million of inflows in 2008.
ETFS Physical Platinum (PHPT) experienced inflows of $35 million last week. This included 300,000 securities on Friday which was the largest number of PHPT securities ever issued on any single day. Last week's issuance of ETFS Physical Platinum securities marks the largest number of PHPT securities issued since February 2008. The Price of PHPT ended up 5.9% last week at $85.33 - each PHPT represents 0.0992 ounces of physical platinum.
Oil inflows were also strong last week. Combined flows into ETFS Crude Oil (CRUD), ETFS Brent (OILB), ETFS WTI (OILW) and ETFS Leveraged Crude Oil (LOIL) rose by $33 million last week, the 5th consecutive weekly increase. Inflows into long oil ETCs have now risen by $93 million over the past four weeks, reversing the strong outflows during August and September. ETFS Short Crude Oil (SOIL) recorded its seventh consecutive week of outflows during the week, indicating a more positive outlook since oil prices moved into the $50 per barrel range. This is in contrast to only a few months ago when oil prices peaked at around $147 per barrel and ETFS Short Crude Oil (SOIL) was the most highly traded ETC and ETF on the London Stock Exchange (LSE).
ETF Securities has also seen increasing flows into Short and Leveraged ETCs. Flows last week indicate a more positive outlook as redemptions of Short ETCs outnumbered applications by 2:1, indicating a reduction in short positions. Consistent with an improvement in sentiment, Leveraged ETCs experienced a rise in net inflows with applications also outnumbering redemptions 2:1 (indicating an increase in long positions). Last week, flows into ETF Securities' range of ETCs indicate a more positive outlook for energy, precious metals and industrial metals. Flows into agriculture ETCs showed a mixed outlook.
ETF Securities recently enhanced its ETC platform through the 100% collateralisation of the 120 ETCs which track DJ-AIG commodity indices. This collateralisation means that counterparty risk has largely been removed. ETF Securities also offers investors six physically backed precious metal ETCs that are backed by allocated metal - uniquely identifiable bars which carry no bank credit risk.
Recently ETF Securities listed Europe's first carbon ETC - ETFS Carbon (CARB) is designed to track the price of carbon emissions allowance futures traded on ICE. In total, ETF Securities now offers more than 130 ETCs with over $6.3 billion in assets. The ETCs provide investors with a wide variety of investment strategies with ETCs offering physical, long, forward, leveraged and short exposure to all commodity sectors. ETCs are simple to access as they are traded in three currencies (Euros, USD and Sterling) and listed on five major European Exchanges including the London Stock Exchange, Euronext Paris, Euronext Amsterdam, Deutsche Borse and Borsa Italiana.
Commenting, Nik Bienkowski, Chief Operating Officer, at ETF Securities, said:
"Last week's inflows into Exchange Traded Commodities show many investors are still interested in a wide range of commodities despite the recent pull back as a result of the weakening economy. $185 million of inflows into ETCs is a good achievement in any market. The prices of most ETCs have fallen by 25% to 50% since 1 July 2008. The pattern of flows into ETCs last week indicate that investors may be starting to view many commodities more positively.
"A fall in demand has driven commodity prices down recently, however the tight supply situation in a number of commodities has not changed significantly. Recent record flows into ETFS Physical Platinum and oil ETCs, whose prices have fallen by approximately 65% from their peaks this year, show that some commodities may now be offering good long term potential. Regardless of an investor's view, ETF Securities offers both long and short ETCs which enable investors to profit in a rising or falling market."
Nichols Brooks, Head of Research and Investment Strategy, at ETF Securities, also commented:
"ETFS Physical Gold (PHAU) experienced $140 million of inflows last week. The strong flows into PHAU appear to be part of increasing fund flow into physical gold including coins, gold bars and jewelry. Physical demand for gold has surged as investors have become increasingly concerned about the outlook for major currencies as central banks have been forced to ease aggressively and governments to substantially increase fiscal spending and debt in an attempt to offset collapsing private sector growth. The price of ETFS Physical Gold ended the week at $80.99, up 10.4% since Thursday 20 November."
