Rising prices and expanding exchange traded fund (ETF) options have lured so many investors to commodities this year that inflows may eclipse those of record-busting 2008.
Investors in 2009 have sought the security of hard assets, fearing imminent inflation, an ever-weaker U.S. dollar and an anemic domestic economy. [Why steel is rebounding.]
David Brough for Reuters reports that investment inflows into commodities is expected to exceed that of 2008, and investors have been more than compensating for the weak physical demand. [Why investors still flock to gold.]
Long- commodity ETFs have seen about $3 billion in new assets since November, as net cash flow was more than triple October’s total. It was also the biggest influx since summer. Brain Baskin for The Wall Street Journal reports that the impending crackdown by regulators on commodity ETFs began to scare off potential investors, however, the fear proved to be short-lived. [Agriculture is also attracting investor interest.]
The Commodity Futures Trading Commission (CFTC) held hearings to determine whether there should be position limits in certain commodity ETFs, but it has yet to issue its decision. [What CFTC decision could mean.]
For more stories about commodities, visit our commodity ETF category.
- iShares GSCI Commodity Indexed Trust (NYSEArca: GSG): up 8.2% year-to-date
- PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBA): up 0.5% year-to-date
- PowerShares DB Base Metals Fund (NYSEArca: DBB): up 87.4% year-to-date
- Market Vectors Coal ETF (NYSEArca:KOL): up 144% year-to-date
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.