Exchange-traded commodities provider ETF Securities has announced that its total assets under management have grown in the past by 25 per cent to more than USD2.9bn over the past five week
Exchange-traded commodities provider ETF Securities has announced that its total assets under management have grown in the past by 25 per cent to more than USD2.9bn over the past five weeks, including inflows of more than USD170m in one week alone.
The firm says it has also seen record flows into its new ETCs, which were listed on the London Stock Exchange, Deutsche Börse and Euronext Paris in the final two months of 2007 and are the first listed products to track the new Dow Jones-AIG forward commodity indices.
The forward ETCs, which are designed to provide investors with less volatility and more options regarding exposure to backwardation and contango in the commodity markets, have received asset inflows exceeding USD130m of assets since their launch in October.
Precious metals and agriculture ETCs have experienced the greatest increase in assets as well and the highest returns since the beginning of December, together accounting for more than 80 per cent of growth in assets under management.
Precious metal ETCs, comprising platinum, silver, gold and a precious metals basket, have now accumulated more than USD1.1bn in assets since April 2007, adding USD260m – representing to growth of 43 per cent – over the past six weeks. Over that period platinum and palladium prices rose by 8 per cent, gold by 13 per cent and silver 15.5 per cent.
Launched in September 2006, agriculture ETCs have now more than USD1bn in assets, adding USD300m in the past six weeks. Of this total, USD233m went into three ETCs covering the broad agricultural sector, grains and soft commodities, which have risen by between 10 and 15 per cent since December 3.
More than 50 ETCs are now listed in three currencies on five European exchanges. Aggregate ETC trading volumes reached USD415m in the second week of January, compared with USD195m during the first week of December, and average daily volumes have grown eightfold from USD10m at the beginning of 2007 to USD80m.
‘Continued equity market volatility combined with economic uncertainty regarding inflation and growth are weighing down equity markets,’ says ETF Securities’ head of listing and research, Nik Bienkowski. ‘The sub-prime crisis and significant capital raising by major investment banks are adding to the flow of negative news surrounding the financial markets.
‘It is during these times that commodities and precious metals have tended to outperform. Analysis of historical returns has shown that due to commodities’ low correlation with equities, commodities have tended to outperform equities when the latter experience negative monthly and annual returns. Demand for precious metals and index ETCs reflects investors’ desire to allocate part of their portfolios from equities to commodities.’