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ETF Securities sees USD400m of ETC inflows


ETF Securities has seen USD400m of net inflows across precious metals, energy and agriculture over the first six weeks of the year.

ETFS long oil ETCs saw USD49m of inflows last week, taking inflows over the past four weeks to USD143m, equivalent to USD79m and USD208m respectively in effective inflows, allowing for the double exposure of leveraged oil ETCs.

These inflows have coincided with a drop in spot oil prices towards USD70/barrel.

ETFS Short Crude Oil saw strong inflows at the start of 2010 as spot prices breached the USD80/barrel mark. This switch in investor positioning suggests some investors are taking active tactical trading following range-bound trading in spot oil prices recently.

With regards to agricultural commodity ETCs, investor interest in grains continues, with YTD inflows into ETFS Wheat and ETFS Corn making up two of the top ten performers so far this year. ETFS Wheat has seen USD26m of inflows in the first six weeks of 2010, a quarter of the entire yearly inflows over 2009.

ETFS Grains underperformed ETFS Softs by 46 percentage points in 2009, led by a 26 per cent drop in ETFS Wheat. Recent inflows could represent some investor expectations of a catch-up in wheat prices compared to other agriculture prices in 2010 after near record harvests across most major Northern Hemisphere exporters weighed on wheat prices in 2009.

Precious metals have seen the strongest inflows YTD, with global gold, silver, platinum and palladium holdings at, or exceeding peaks set in late 2009.

In terms of returns, continuing weakness in the Euro helped push spot gold prices to a record high above EUR813/oz at close of trade yesterday. At the start of London trade today prices had pushed up higher towards EUR815/oz.

Daniel Wills, senior analyst at ETF Securities, says: “Our physically-backed platinum group metal ETCs recently launched in the US have seen an exceptionally strong start to 2010. With over half a billion dollars of inflows into these products during their first five weeks of trading, inflows into these products add to record inflows into our European products, ETFS Physical Platinum and ETFS Physical Palladium, during the course of 2009. With close links to emerging market growth via intensive use in auto-catalyst technology, these metals have gained further prominence recently with the emergence of China as the world’s largest car market.

“Meanwhile, renewed concerns surrounding sovereign credit risk at the start of 2010 has helped underpin safe haven demand for gold as a hedge against currency debasement and financial market dislocation. Oil and agriculture-based ETC flows suggest that tactical and value-based strategies are gaining prominence alongside more strategic long term holdings heading into 2010.”

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