ETF Securities has recently published “Commodities review 2008”. According to the analysis gold was one of the best performing assets during 2008 while commodities generally have outperformed over five and ten years.
Although many assets fell in unison last year during the peak of the credit crisis, what really stands out is commodities’ outperformance over longer periods. The DJ-AIG Commodity Index 3 Month ForwardSM returned 70% and 272% over five and ten years compared to 0% and -2% for the MSCI AC World Index and -10% and -13% for the S&P500 Index over the same periods.
ETFS Physical Gold (PHAU) was the best performing commodity in 2008, up 4% in USD terms while most other asset classes suffered significant falls. The gold spot price rose 44% in GBP terms and 11% in EUR terms during 2008. MSCI AC World Index measured that gold outperformed equities by more than 46% in USD terms. As a result, there were continued net inflows into ETFS Physical Gold (PHAU) and Gold Bullion Securities (GBS) during 2008.
ETFS Short Gasoline (SGAS) was the best performing ETC of 2008, returning 94%. Many other Short ETCs also performed well in 2008 with the best performing Short ETCs being industrial metals. ETFS Short Industrial Metals DJ-AIGCI (SIME) and ETFS Short Copper returned 72% an 82%.
In total, ETF Securities now offers more than 130 ETCs with over $7.2 billion in assets. ETCs are simple to access as they are listed on London Stock Exchange, Euronext Paris, Euronext Amsterdam, Deutsche Borse and Borsa Italiana. Most recently, ETF Securities listed Europe’s first carbon ETC – ETFS Carbon (CARB) is designed to track the price of carbon emissions allowance futures traded on ICE.
“Last year was a year of three parts,” says Nik Bienkowski, chief operating officer, ETF Securities. “The first half of 2008 experienced large flows into a broad range of ETCs including agriculture, livestock, precious metals and energy.”
“The second part of the year was marred by the credit crisis taking effect with outflows across the financial industry including commodities experienced. The final part of 2008 was marked by investors returning to liquid and transparent products, with a focus on oil and gold for commodities.”
“In 2009, we expect investors to continue to look for ways to profit in the current market however there will be increasing focus on liquidity, credit and transparency – ETCs solve all these problems,” continues Nik Bienkowski.
“ETFS Physical Gold (PHAU) has been a particularly strong outperformer, with 2008 returns up 4% in US dollar terms (marking the eighth consecutive year of positive returns) and up 44% in GBP and 11% in EUR,” says Nicholas Brooks, head of Research and Investment Strategy, ETF Securities.
“In 2009 safe haven assets such as gold and less economically sensitive commodity sectors could see the strongest flows, although our platform of oil ETCs has seen $435m of inflows over the past nine weeks as oil has traded in the $40 to $50 range.”
L.D.