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Commodity equity ETFs up by over five per cent on average, says ETF Securities


Cyclical-based commodity exchange-traded funds have extended last week’s rise, with the majority of ETFs up over ten per cent over the past month, according to ETF Securities.

Cyclical-based commodity exchange-traded funds have extended last week’s rise, with the majority of ETFs up over ten per cent over the past month, according to ETF Securities.

Cyclicals extended last week’s gains on further consolidation of various global activity indictors, extending the rally in assets perceived as inflation and USD hedges as the Fed steps up its quantitative easing policy.

The ETFS Dow Jones Stoxx 600 Basic Resources Fund is the strongest performing ETF over the past month, up 22 per cent over the past four weeks. It has been the second strongest performing Stoxx sector over the past month.

The ETFS S-Net ITG Global Agri-Business Fund cemented its place as the top performing ETF Securities equity ETF so far in 2009, up over ten per cent year-to-date and almost 20 per cent over the past three months. This puts its outperformance against MSCI World at 22 per cent over the past quarter.

ETF Securities says agriculture’s low correlation to the business cycle and strong long term supply-demand fundamentals are underpinning its top performance.

Energy ETFs continue their recent solid growth with the ETFS DAXglobal Alternative Energy Fund, ETFS Russell Global Coal Fund and ETFS WNA Global Nuclear Energy Fund up 13 per cent on average over the past month.

The ETFS Dow Jones Stoxx 600 Oil & Gas Fund (OILG) continues to lag recent increases in oil prices, with WTI spot oil prices up 17 per cent over the past month versus a six per cent rise in OILG. This relative underperformance of the oil ETF has left OILG trading at a 16 per cent discount relative to its historic ratio to the WTI oil price.

The ETFS Russell Global Gold Fund, which tracks the word’s biggest gold miners, remains the strongest long run performer, up 78 per cent since 31 October. This compares to an 11 per cent fall in the MSCI World Index over the same period.

ETF Securities says gold demand is likely to remain strong this year with high political, economic and financial uncertainty driving demand for safe haven assets and defensive themes. Investment in gold miners provides leveraged exposure to underlying gold prices, with miners profiting from stronger revenue and falling costs.

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