Short Oil ETC Flows Pick Up, Rotation into Natural Gas Continues, Defensive ETFs Outperform As Market Rally Takes a Breather

ETFs: Defensive ETFs Outperform As Market Rally Takes a Breather
ETCs: Short Oil ETC Flows Pick Up, As Rotation into Natural Gas Continues …

Defensive ETFs Outperform As Market Rally Takes a Breather

ETF Securities ETF Flow and Return Highlights

– Defensive ETFs on ETF Securities’ ETF platform performed relatively strongly last week as mixed economic data worldwide saw the market rally take a breather following strong gains over the past few months. The Dow Jones STOXX 600 Utilities Fund (UTIL) and the Russell Global Gold Fund (AUCO) of gold miners were the top performers, outperforming the STOXX 50 Index in a week of volatile trade.
– AUCO returned to near top performance last week as the underlying gold spot price found support in the midst of a pare back in market risk appetite. Gold miners have been benefiting from investors’ bullish view on the gold price and miners’ ability to leverage on gold price gains as the economic crisis has put downward pressure on their input costs, helping to boost their prospective operating margins. Despite strong performance this year, gold miners are still trading at a substantial discount to their historical levels versus the gold price (see below).
– Basic Resource Equity ETFs remain the strongest performers of ETF Securities ETF Platform, with a 41% rise in the ETFS Dow Jones STOXX 600 Basic Resources Fund (BRES) and a 55% rise in the ETFS Russell Global Coal Fund (COAL). BRES remains the strongest performing STOXX 600 Sector year-to-date, outperforming all other sectors by 23 percentage points on average so far this year.

Short Oil ETC Flows Pick Up, As Rotation into Natural Gas Continues

ETF Securities ETC Flow and Return Highlights

– Flows into natural gas ETCs continued to surge last week with flows into ETFS Natural Gas (NGAS) rising by $114mn and flows into ETFS Leveraged Natural Gas (LNGA) increasing by $10mn. This is the 19th consecutive week of inflows into long natural gas ETCs bringing total inflows since mid February to $561mn.
– Last week ETCs tracking shorter maturity oil futures returns (such as ETFS Crude Oil – CRUD, ETFS Brent 1mth- OILB and ETFS WTI 2mth – OILW) saw $101mn of outflows, the 7th consecutive week of outflows. Up until last week inflows into ETFS Short Crude Oil were minimal (unlike the situation in May-August last year when there were over $300mn of inflows). However, last week ETFS Short Crude Oil (SOIL) saw inflows of $18mn, the largest weekly inflow since August 2008.
– After natural gas the largest inflows last week were into ETFS Forward All Commodities (FAIG), with inflows of $51mn. FAIG and ETFS All Commodities (AIGA) have seen a marked pick up in flows recently with cumulative flows so far this year of $138mn.
– Agriculture ETCs also continued to see strong inflows last week, increasing by $31mn. This year weekly flows into agriculture ETCs were only positive, increasing by $497mn so far, making agriculture ETCs the most popular ETCs after gold and oil.

Source:ETFWorld.co.uk – ETFSecurities