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Commodity ETPs back in favour as sentiment turns


Commodities moved back into favour in the first quarter, with commodity prices as measured by the DJ-UBS Commodity Index rising by seven per cent and commodity ETPs seeing their first quarterly inflows after four consecutive quarters of outflows. 

Total assets invested in commodity ETPs increased to USD122.4bn at the end of Q1 2014 from USD122.1bn at the end of last year, with precious metals, agriculture and industrial metals seeing the bulk of the inflows.
Silver saw the largest inflows during the quarter as investors looked to the metal as a leveraged play on improved sentiment towards gold.

Nicholas Brooks, head of research and investment strategy at ETF Securities, says: “After seeing selling in January, gold ETPs moved strongly back into favour in February and March as investors revised down their highly bullish US growth assumptions and revised up the global risk outlook. Broad commodity ETPs also saw a turn in sentiment, with asset allocators rotating into the asset class as an alternative to overstretched developed market equities.

“Platinum ETPs saw strong demand as an extended strike in South Africa raised supply concerns. Coffee and natural gas ETPs, on the other hand, saw aggressive profit-taking as prices of both commodities surged on weather-related supply issues. Oil ETPs also saw strong investor profit taking as the WTI oil price rallied on strong US demand for oil products early in the year.”

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