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- $400mn of global net inflows YTD
Gold closes at record high above €813/oz yesterday, higher at start of London trade today - Long Oil ETCs see strong inflows - $143mn over the past four weeks
- Investors see value in grains – wheat inflows already one-quarter of 2009 total
ETF Securities (ETFS), the global pioneer in Exchange Traded Commodities (Commodity ETCs), 3rd generation Exchange Traded Funds (ETFs) and Exchange Traded Currencies (Currency ETCs) has seen a strong start to 2010, with $400mn of net inflows across precious metals, energy and agriculture over the first 6 weeks of the year.
ETFS long oil ETCs saw $49mn of inflows last week, taking inflows over the past four weeks to $143mn (equivalent to $79mn and $208mn respectively in effective inflows, allowing for the double exposure of leveraged oil ETCs). These inflows have coincided with a drop in spot oil prices towards $70/barrel. These flows contrast with strong inflows into ETFS Short Crude Oil (SOIL) seen at the start of 2010 as spot prices breached the $80/barrel mark. This switch in investor positioning suggests some investors are taking active tactical trading following range-bound trading in spot oil prices recently.
With regards to agricultural commodity ETCs, investor interest in grains continues, with YTD inflows into ETFS Wheat (WEAT) and ETFS Corn (CORN) making up 2 of the top 10 performers so far this year. WEAT has seen $26mn of inflows in the first six weeks of 2010, a quarter of the entire yearly inflows over 2009. ETFS Grains (AIGG) underperformed ETFS Softs (AIGS) by 46 percentage points in 2009, led by a 26% drop in WEAT. Recent inflows could represent some investor expectations of a catch-up in wheat prices compared to other agriculture prices in 2010 after near record harvests across most major Northern Hemisphere exporters weighed on wheat prices in 2009.
Precious metals have seen the strongest inflows YTD, with global gold, silver, platinum and palladium holdings at, or exceeding peaks set in late 2009. Palladium physical holdings stand at 1.1 mn oz, a world record. In terms of returns, continuing weakness in the Euro helped push spot gold prices to a record high above €813/oz at close of trade yesterday. At the start of London trade today prices had pushed up higher towards €815/oz. ETFS physically-backed gold holdings have held near record levels of 8mn ounces since the start of 2010 despite more volatile spot prices recently. This resilient investment demand highlights the strategic nature of much of this investment, with physical holdings doubling to 8mn ounces over the past two years. Gold has returned over 160% in USD, EUR, GBP, AUD and Yen terms in the 10 years ended Dec 31 2009, making it one of the most consistently strong performing investment assets worldwide over the past decade.
Daniel Wills, Senior Analyst at ETF Securities commented:
“Our physically-backed platinum group metal ETCs recently launched in the US have seen an exceptionally strong start to 2010. With over half a billion dollars of inflows into these products during their first five weeks of trading, inflows into these products add to record inflows into our European products, ETFS Physical Platinum and ETFS Physical Palladium, during the course of 2009. With close links to emerging market growth via intensive use in autocatalyst technology, these metals have gained further prominence recently with the emergence of China as the world’s largest car market. Meanwhile, renewed concerns surrounding sovereign credit risk at the start of 2010 has helped underpin safe-haven demand for gold as a hedge against currency debasement and financial market dislocation. Oil and agriculture-based ETC flows suggest that tactical and value-based strategies are gaining prominence alongside more strategic long term holdings heading into 2010.”
