Alt Investments

Exchange Traded Commodities Benefit from Credit Crunch

Nick Parmee 17 July 2008

Exchange Traded Commodities Benefit from Credit Crunch

London-based ETF Securities saw record inflows into its exchange traded commodities platform on Tuesday this week.  Precious metals, agriculture, industrial metals and leveraged ETCs made the largest contribution to a record-breaking day. 

Excluding the recent acquisition of Gold Bullion Securities, ETF Securities’ total assets have grown by $1.7 billion or 30 per cent in the past 11 weeks to $6.6 billion, with the five physical precious metals contributing more than 50 per cent of inflows, to reach a record $2.7 billion.

As equities continue to show volatility, ETCs have persisted in showing that their returns are uncorrelated to equity market returns, adding to their appeal as investors shun equities while global equity markets plunge to multi-year lows and credit markets reel on concerns of mounting losses.

Safe haven buying saw ETF Securities’ precious metals platform contribute 75 per cent of net inflows.  Approximately $265 million equivalent of inflows were experienced in gold ETCs alone.  Gold ETCs recorded $225 million of trading on the London Stock Exchange as the LSE issued a report showing that gold ETCs took two of the top four spots in terms of trading volumes in June 2008 on the LSE’s ETC/ETF trading platform. 

Gold ETCs traded $1.3 billion while the two physically-backed gold ETCs captured most of this volume, trading $1.2 billion.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes