- Net long positions of $483m experienced over past five weeks
- Net long positions of $218m added to oil, contributing 45% of all ETC flow
- Net long positions of $140m added to physical gold ETCs, contributing 29% of all ETC flow
- Commodities remain best performing asset class over five and ten years
- ETF Securities issues commodities report "Commodities Review 2008"
ETF Securities Limited (ETFS), the global pioneer of Exchange Traded Commodities
(ETCs), and provider of Exchange Traded Funds (ETFs) has seen continued strong
inflows into ETCs. Last week was the fifth consecutive week of inflows into ETCs,
with $323 million flowing into a range of ETCs including precious metals, energy
and industrial metals. This included $403 million into long ETCs including
Classic, Forward and Leveraged ETCs and outflows of $80 million from Short ETCs.
The inflows are a result of more positive investor sentiment. 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.
Oil inflows continue to be strong. Combined flows into ETFS Crude Oil (CRUD), ETFS Brent (OILB), ETFS WTI (OILW) and ETFS Leveraged Crude Oil (LOIL) rose by $61 million last week, the 7th consecutive weekly increase. Inflows into long oil ETCs have now risen by $218 million over the past five weeks, reversing the strong outflows during August and September. ETFS Short Crude Oil (SOIL) recorded its eighth of the past nine weeks with outflows, indicating a more positive outlook since oil prices moved into the $40 to $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).
In the past five weeks, energy ETCs experienced $225 million of inflows while short energy ETCs experienced $30 million of outflows, equating to a net long position of $255 million. In total, energy ETCs contributed 53% to the total net long position added to ETCs.
Physical gold ETCs also experienced positive inflows over the past five weeks, with $140 million begin added to ETFS Physical Gold (PHAU) and Gold Bullion Securities (GBS). ETFS Physical Platinum (PHPT) added $33 million while there was also a reduction in the net position of short precious metal ETCs. In the past five weeks, precious metal ETCs experienced $171 million of inflows while short precious metal ETCs experienced $4 million of outflows, equating to a net long position of $175 million. In total, precious metal ETCs contributed 36% to the total net long position added to ETCs.
Industrial metal ETCs also saw some activity over the past five weeks. Despite industrial production forecasts having been revised down recently, ETFS Industrial Metals DJ-AIGCISM (AIGI) added $8 million. In total, $13m of long industrial metal ETCs were added. However the largest trades were seen in outflows of short industrial metal ETCs. Short industrial metal ETCs experienced outflows of $25m. This equates to a net long position of $38 million being added to industrial metals. In total, industrial metal ETCs contributed 8% to the total net long position added to ETCs.
Today, ETF Securities is also announcing the release of its annual commodities review. Commodities Review 2008 goes though the major events for each commodity this year. The driving factors behind commodity prices in 2008 included increasing demand, particularly from China and other emerging nations, numerous supply related issues, and the global financial crisis which caused a sell off in every asset class. Over the past 12 months, gold was the stand out performer with a return of approximately 2% in US Dollars, 37% in British Pounds and 18% in Euros. Over the longer term, commodities have outperformed almost every other asset class - energy and precious metals were some of the top performers over the last five and ten years. Grains and precious metals were the top performers over the past three years. The report "Commodities Review 2008" may be obtained directly from ETF Securities or through its website.
In total, ETF Securities now offers more than 130 ETCs with over $6.4 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. Most 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.
Commenting, Nik Bienkowski, Chief Operating Officer, at ETF Securities, said:
"Inflows into Exchange Traded Commodities over the past five weeks shows that many investors are still interested in a wide range of commodities despite the recent pull back as a result of the weakening economy. $323 million of inflows into ETCs over five weeks is a good achievement in any market. With inflows into long ETCs and outflows from short ETCs, a net long position of $483 million has been accumulated."
"Of the $483 million net long position, 53% has been into energy ETCs with 45% of this being into a range of long oil ETCs. With oil having fallen from $147 per barrel to around $45 per barrel, many investors now see this as a long term buying opportunity. While demand for oil has fallen, longer term supply issues still exist such as falling production, falling reserves and a shortage of skilled workers. 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."
"Precious metals and gold also continue to receive significant interest. $140 million has flowed into physical gold ETCs such as ETFS Physical Gold as investors continue to show concern over risks to the world's financial system, currencies and credit. Including $33 million into ETFS Physical Platinum, precious metals contributed 33% to the increased net long position in ETCs of $483 million. Over the past 12 months, gold was the stand out performer with a 2% return - a fitting result given that capital preservation has been the key. In other major currencies, gold returned 37% in British Pounds and 18% in Euros."
