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Shipping ETF leads cyclicals higher, says ETF Securities

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The highest beta commodity equity exchange-traded funds extended their out-performance last week, with average price increases of six per cent over the week and 32 per cent over the pas

The highest beta commodity equity exchange-traded funds extended their out-performance last week, with average price increases of six per cent over the week and 32 per cent over the past month, according to ETF Securities.

ETFS Russell Global Shipping Large Cap Fund, ETFS Russell Global Steel Large Cap Fund and the ETFS Dow Jones Stoxx 600 Basic Resources Fund have all seen returns of over 25 per cent since mid-March as investor risk appetite and demand for hard assets has continued to rise.

The ETFS Russell Global Shipping Large Cap Fund has led cyclical-oriented ETFs higher, rising eight per cent last week and by 26 per cent over the past four weeks. Dry bulk shipping rates, as measured by the Baltic Dry Index, have rebounded 118 per cent since the start of 2009 as Chinese re-stocking of some basic resource inventories led to some improvement in bulk freight demand after sharp declines in 2H 2008. Historically, the Shipping Large Cap Fund has had a strong positive correlation to the Baltic Dry Index.

The ETFS Dow Jones Stoxx 600 Basic Resources Fund has been the best performing of ETF Securities equity ETFs, rising by 22 per cent over the past three months. The Dow Jones Stoxx 600 Basic Resources Index, which BRES tracks, is the best performing sector in the Dow Jones Stoxx 600 index this year.

ETFS Russell Global Steel Large Cap Fund is now the third strongest of ETFS’ equity ETFs over the past six months, catching up to the performance of ETFS Russell Global Gold Fund and the ETFS S-Net ITG Global Agri Business Fund.

The ETFS S-Net ITG Global Agri-Business Fund has been one of the most consistent ETF performers, with strong double digit growth year-to-date and over the past six months. AGRI has outperformed the MSCI World Index by 25 per cent over the past six months. Agriculture’s low correlation to the business cycle and strong long term supply-demand fundamentals are key factors supporting investor demand for AGRI.

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