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ETF Securities reaches USD2bn in assets

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ETF Securities, which has pioneered the listing of exchange-traded commodities on European stock exchanges over the course of the past year, has its product growth reflected in assets unde

ETF Securities, which has pioneered the listing of exchange-traded commodities on European stock exchanges over the course of the past year, has its product growth reflected in assets under management, which have risen from USD250 million at the end of 2006 to more than USD2bn by the end of October. In total, ETF Securities now has more than 50 ETCs.

The speed and growth of the business has been largely due to the popularity and performance of commodities as an asset class, the firm says, while the creation of dedicated ETC segments across Europe and multi-currency trading has helped many investors access the asset class for the first time.

ETF Securities has responded to the growth in investor interest with recruitment in areas including sales, product development and legal. The firm has also recruited 15 market-makers and authorised participants to provide liquidity and distribution for ETCs.

Five European stock exchanges – London, Milan, Frankfurt, Paris and Amsterdam – have created dedicated ETC segments as average ETC volumes have tripled this year to more than USD30 million a day, or more than USD7bn on an annualised basis.

Investor demand for non-correlated assets to improve portfolio diversification is flowing into alternative assets including commodities. This has led ETF Securities to create new ETCs that allow investors to implement different investment strategies in commodities. As a result, it has recently launched new ETCs that provide exposure to different commodities and different parts of commodity futures curve.

This year new ETC segments have been launched in Italy and France, and new products have been added to all five ETC platforms, including the world’s first entire physically-backed precious metals platform, which provides exposure to the four major precious metals – gold, silver, platinum and palladium – and a basket of all four. Since the end of April the platform has accumulated USD620 million in assets and has grown by more than 460 per cent amid the volatile financial markets of the past four months.

More recently, ETCs offering exposure to different parts of the commodity futures curve have been listed in London, including six oil ETCs which track three different maturities (one, two and three years) and nine ETCs which track the Dow Jones-AIG Commodity Index 3 Month Forward Indices. These offer investors the opportunity to benefit from any backwardation or contango in the futures market and are the first exchange traded products to track the new Dow Jones-AIG Commodity Indices.

Investors can now trade ETCs on the London Stock Exchange in three major currencies, US dollars, sterling and euros. Ten of the most popular ETCs were listed on the new multicurrency platform in October including oil, gold, silver and agriculture.

Over the past few months, ETFS Physical Gold has been the most popular ETC, having accumulated USD400 million in new assets over the past four months alone. Investors have traded more than USD1bn in the eight precious metal ETCs launched in the past 12 months. ETFS Physical Gold is the first ETC tracking physical gold to be traded in sterling and the only physically-backed ETC eligible for UK tax wrappers such as SIPPs, PEPs, ISAs and CTFs.

‘ETF Securities is the innovator of ETCs and continue to be a world leader,’ says chairman Graham Tuckwell. ‘The company now has more than 50 ETCs listed on five exchanges with more than USD2bn in assets, which shows our success in bringing a ground-breaking range of commodities to European investors for the very first time. Current growth is around USD60m a week.

‘The speed at which our assets under management are growing says a lot about investors’ appetite for simple access to commodities. Investors have responded to our products and we will continue to bring innovation to the marketplace to meet this demand.

‘A surge in global demand for natural resources has acted as a catalyst for our expansion in assets under management. The growth in assets confirms each exchange’s commitment to ETCs with the launch of dedicated platforms in each country. We now offer a wide range of investment trading opportunities in the commodities sector.’

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