Commodity exchange traded products were dumped in the last month of 2011 as investors returned to the equities markets. Still, with investor confidence rising, traders are beginning to pick up riskier commodity plays again, according to a report.
Powershares DB Commodity Index Fund ETF (DBC) is up 2.4% year-to-date.
According to BlackRock (BLK), commodity ETPs lost $2.5 billion in December, with U.S.-listed precious metals ETPs experiencing outflows of $2.4 billion for the month, reports Claire Milhench for Reuters. In contrast, global equity ETPs brought in $10.5 billion, with $12.2 billion going into North American equities.
Nicholas Brooks, head of research and investment strategies at ETF Strategies, said that the outflows in precious metals were due to profit taking after the strong yearly performance, along with a stronger U.S. dollar. The S&P GSCI Gold Index was up 9.3% for 2011, despite dropping 10.5% in December.
“Gold has tended to have an inverse relationship with the dollar so dollar strength could have driven some outflows, but it was U.S. investors who reacted more,” Brooks said in the Reuters article.
Steven Cohen, iShares head of investment strategies in EMEA, BlackRock, believes the inflows into large-cap U.S. equities were a result of improving sentiment on better U.S. economic data. Additionally, investors’ appetite for risk could support commodities in January, Cohen said. [What’s in Store for Silver ETFs?]