ETF Securities’ commodity ETP data showed resurgent demand for physically backed gold ETPs, following another credit rating downgrade for Greece. Moody’s Investor Service indicated that there is ‘at least an even chance of default over the rating horizon’ for Greece. Despite the weakness in global growth data over the past weeks, investors last week continued to accumulate positions in diversified commodity ETPs and cyclically-geared commodities like industrial metals. …
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• Greek default concern drives largest inflows into physically-backed gold ETPs in seven weeks. ETFS physically backed gold ETPs snapped a month-long run of profit-taking as concerns escalate about a potential Greek debt restructuring. ETFS Physical Gold (PHAU) and Gold Bullion Securities (GBS) saw total inflows of $36mn.
• ETFS Forward All Commodities (FAIG) saw the largest weekly inflows in 2 years, totalling $32mn. Investors appear to be looking to broad commodity basket ETPs for portfolio diversification as the risks to the economic recovery continue to rise. Investors also appear to be looking to forward exposures to combat the increased volatility at the short-end of commodity futures markets.
• ETFS Natural Gas ETPs see outflows of $54mn as investors sell down positions as the natural gas spot price reaches the highest level since July 2010 (4.79$/MMBtu) on the back of a heat wave affecting parts of the US. Outflows were mainly concentrated ETFS Leveraged Natural Gas (LNGA), which recorded a 20% return over the past week.
• Industrial metal ETPs see 3rd consecutive week of inflows, led by flows into copper. ETFS Zinc (ZINC) saw a jump in inflows after the Japanese Ministry of Finance released data showing a surge in zinc imports in April after the earthquake curbed production. Investors also appear optimistic about the prospects for emerging market growth, despite inflationary concerns, with ETFS industrial metals ETPs experiencing their third consecutive week of net inflows, totalling 11mn. ETFS Copper (COPA) received the bulk of net inflows with nearly $8mn last week.
• Agriculture prices diverge, highlighting diversification benefits. Wheat prices slumped last week after Russia lifted its 10-month ban on grain exports. The 6.1% decline in wheat made it the worst commodity performer during the week. In contrast, the cotton front month future rebounded strongly from its 2011 low in May, posting a 7.6% return over the week. The diverging performance of agriculture commodities highlights that these commodities continue to perform based on their own very specific fundamentals and therefore continue to provide portfolio diversification benefits.
Source: ETFWorld – ETF Securities Commodity ETP Weekly
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