Highlights from the ETF Securities report ending Friday 20 June 2008:
* Assets under management (AUM) broke through US$6bn on surging flows into Precious Metals and Energy Exchange Trade Commodities (ETCs). AUM has risen by 1 billion US dollars in less than two months. Flows into ETFS Physical Gold rose $44 million last week alone, bringing inflows year-to-date to US$557mn, the largest of any of our ETCs.
* ETFS Physical Platinum has also been a key driver of the rise in AUM, with inflows rising by $32mn last week and $472mn so far this year. Our broader precious metals baskets ETFS Precious Metals and ETFS Physical PM Basket have seen AUM rise $149mn year-to-date, highlighting strong interest from asset allocators and longer-term managers to gain broad access to the precious metals asset class.
* Precious metals ETCs are now seeing stronger inflows than agriculture ETCs. So far this year precious metals ETCs as a group have experienced a $1.4bn increase in AUM while agriculture ETCs have seen AUM rise by $1.2bn. Last week agriculture ETCs saw net redemptions (outflows) of $38mn vs $98mn of net creations (inflows) for precious metals ETCs. The increasing shift in investor demand toward precious metals likely reflects continued concerns about global financial stability and demand for hedges against rising inflation.
* Demand for ETFS Short Crude Oil has continued to rise at an extremely rapid rate, with inflows increasing by $30mn last week, bringing total inflows to $261mn since listing in late February, second only to ETFS Gold during the period. Hedging activity and pair trading appear to be key drivers of demand for this Short ETC, though directional views are also likely playing role as oil prices continue to hover near all time highs.
* In terms of new trends, ETFS Livestock has continued to see strong inflows. As the chart below shows, flows into this ETC preceded the recent run-up in prices. Assuming the relationship continues to hold, recent flow data indicates there are further gains to come. Another trend worth monitoring is the recent pick-up in demand for ETFS Soybeans (up $22mn last week) and the rally in Softs prices.