Investors new and old have been showing an interest in commodities, and most of the money is flowing into exchange traded funds (ETFs). Rapid industrialization in the developing world and a surge in prices have been key factors in attracting investors. According to Hard Assets Investor on Seeking Alpha, all of the money is going into commodity ETFs, not mutual funds.
The shift towards ETFs has to do with many factors including lower costs, tax advantages, and liquidity. ETFs also allow investors physical access and/or futures based exposure to commodities which tend to be favored over equity exposure.
Total inflows into commodity ETFs during the first half of the year was $4.174 billion, a 25% increase in total assets. Open-ended commodity mutual funds experienced redemptions of $13 million during the same time period.
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