Global commodity exchange traded funds now hold a record high $189 billion in assets as investors continued to pour money into gold and cyclical commodities.
Over the first quarter of 2012, commodity ETFs added $7.5 billion in new inflows, the largest quarterly rise in almost a year, reports Tatyana Shumsky for the Wall Street Journal.
Investors invested $3.6 billion into gold ETFs and $3.1 billion into non-precious metals ETFs, the largest increase in nearly two years.
“The revival in investor risk appetite benefited a wide range of the most cyclical commodities such as copper, tin, oil, platinum, palladium, silver and broad diversifieds,” ETF Securities said in the WSJ article.
Copper ETFs attracted $248 million last quarter, the highest inflows on record. [What Materials, Copper ETFs are Saying About the Market]
“The combination of rebounding economic lead indicators, strong Chinese demand, falling [London Metal Exchange] inventories and supply issues at key mines drove the copper price higher and also stimulated strong investor demand,” ETF Securities added.
Gold, though, still holds the lions share of assets in commodity-based ETFs as investors, shaken by last year’s volatility, remain cautious. [Gold ETF Investors Unfazed by Pullback]
“Gold dominated commodity [ETF] assets under management. You had $134 billion in gold, compared to $189 billion in total,” Nicholas Brooks, head of research and investment strategy for ETF Securities, said in the article. “Most of the people who are in gold [ETFs] are in there because they’re concerned about the sovereign debt issues in the U.S. and in Europe.”
Additionally, growing troubles in the Middle East, particularly from Tehran’s nuclear ambitions, pushed $1.2 billion into crude oil funds. [Oil ETFs Ride Crude Prices Higher on Supply Concerns]
“Demand for oil [ETFs] was the strongest since the second quarter of 2010 and, across all individual commodity [exchange-traded products], only gold and silver saw greater inflows,” ETF Securities added.
Natural gas, which is hovering around a decade low, also attracted investor interest as a “good entry point,” with natural gas ETFs adding $767 million in new assets.
However, commodity ETFs have begun to weaken over the past month.
“In the latter part of March, you started to see some tapering off,” Nicholas Brooks, head of research and investment strategy for ETFS, said in a CNBC report. “And what we’ve seen in the first weeks of April is similar to what we saw in late March. Concern about sovereign risk in Europe is coming back as well as concerns about China growth. Frankly, it’s rational. We had a pretty good run in the first ten weeks of this year.”
For more information on ETF fund flows, visit our ETF performance reports category.
Max Chen contributed to this article.