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Commodities outperform major asset classes during
first quarter 2008
07/04/08
- ETFS All Commodities up 9.4% during first quarter,
outperforming equities by 20%
- ETFS Physical Platinum was top performer in first quarter, up
33.3%
- Commodities were top performing asset class in 5 of the past
10 years
- DJ-AIG Commodities IndexSM was the top performing UCITS
eligible commodity index
ETF Securities’ end of first quarter results for 2008 (1Q08) show that
commodities were once again the top performing asset class. The DJ-AIG
Commodities IndexSM returned 9.6% during 1Q08 with the ETFS All Commodities
ETC returning 9.4% over the same period. With the slow down in the United
Stated and the sub-prime crisis continuing to affect markets, equities were the
worst performing asset class for 1Q08. The S&P500 index returned -9.9%, the
DJ EuroStoxx50 returned -10.6% and the FTSE100 returned -11.5%. Therefore,
the ETFS All Commodities ETC outperformed equities by approximately +20%
over the same period, while the ETFS Leveraged All Commodities DJ-AIGCISM ETC
returned over 17% over the same period.
Of the 37 commodities and baskets of commodities which ETF Securities provides
exposure to, ETFS Physical Platinum was the best performing commodity during
1Q08 showing a return of 33.3% over the quarter. Eight types of ETCs showed
performance above 20% during 1Q08 including: ETFS Copper, ETFS Aluminium,
ETFS Corn and ETFS Natural Gas. Only a few commodities showed negative
performance with ETFS Livestock and ETFS Lean Hogs showing the worst
performance. As a result of this outperformance and also due to the 2008 annual
portfolio rebalancing process where commodities were allocated a strategic
weight in many diversified portfolios, ETF Securities assets under management
(AUM) ballooned by approximately 100% to $5 billion during 1Q08.
On a peer group basis, the DJ-AIG Commodities IndexSM was the top performing
UCITS eligible index during 1Q08, outperforming its peer group by an annualised
3.2%. In addition to the main DJ-AIG Commodities Index, Dow Jones recently
launched 3 Month Forward indices of the DJ-AIG Commodities Index and its
components. In October 2007, ETF Securities listed a range of ETCs based on
these 3 Month Forward indices to provide investors with more choice regarding
exposure to the commodities futures curve. In three of the past four years, the
DJ-AIG Commodities Index 3 Month ForwardSM the top performing passive
commodity index returning 144% - an average of 25.2% per annum - over the
four years.
In addition to its recent historic performance, commodities were also the top
performing asset class in five years of the past ten years. During this ten years,
real estate was the top performer 30% of the time, bonds 10%, equities 10% and
hedge funds 0% of the time.
These results show that asset allocation is an important determinant of portfolio
performance and why it is important to have a diversified portfolio.
Diversification is even more important as 1Q08 showed that returns within
equities are becoming more correlated with a different range of indices and
strategies all being highly correlated. This included US equities, UK equities,
world equities, large-cap, small-cap, growth and value which showed returns last
quarter of around -10%. This increased correlation has resulted from two major
causes; global financial and real economy integration has increased over the past
ten years, and many markets tend to move together during volatile or stressed
markets such as the one we are currently experiencing.
In addition, to the ETCs which provide simple long exposure, ETF Securities
recently listed 66 Short and Leveraged ETCs. Short and Leveraged ETCs offer the
same benefits as the existing ETCs. They are simple to trade on a major stock
exchange, they can be settled and held in ordinary brokerage accounts, they are
transparent and have a clear pricing formula. ETCs are highly liquid with multiple
market makers providing liquidity and continuous pricing. In addition to liquidity
on five European stock exchanges, ETF Securities can create over $1 billion of
new ETCs on a daily basis across its range of over 110 ETCs. The minimum
investment is one ETC.
In total, ETF Securities now offer platforms of physically backed precious metal
ETCs and Classic, Forward, Short and Leveraged ETCs providing exposure to
energy, agriculture, livestock, industrial metals and precious metals. The ETCs
have been listed on five major European stock exchanges in dedicated ETC
trading segments.
Commenting on the quarterly ETC performance figures, Nik Bienkowski,
Chief Operating Officer, at ETF Securities, said:
“There has been a significant increase in demand for ETCs linked to the price of a
wide range of commodities. Most recently, this demand has been for precious
metal and agriculture ETCs as investors seek to diversify their portfolios away
from equities, real estate and hedge funds and into other asset classes.
“Given current market uncertainty, we have seen strong inflows into a wide range
of our ETCs, resulting in asset growth of nearly 100% during the first quarter to
approximately $5.0 billion at the end of the quarter.
“Numerous studies have shown that commodities can improve a portfolio’s
performance due to their low correlation with equities. The results from 1Q08
support this. In addition, the returns of different equity indices were highly
correlated during the past nine months, resulting in increased portfolio volatility.
Due to their low to negative correlation, an allocation to commodities could have
reduced this volatility in addition to increasing returns.”
For further information, please contact:
Roman Townsend
Penrose Financial
Tel: +44 (0) 20 7786 4875
ETF Securities continues its series of conference calls for finance
professionals:
The Latest Trends in Agriculture Markets
8 April 2008, 15:00pm London Time
Click here to register
UCITS III and Permitted Investments
10th April, 11:00am or 15:00pm London
Click here to register
Explaining ETF Liquidity
17th April, 11:00am or 15:00pm London Time
Click here to register
Notes to editors:
The management of ETF Securities Limited pioneered the development of
Exchange Traded Commodities (ETCs), in 2003. Building on its success ETF
Securities created the world’s first entire ETC platform which was listed on the
London Stock Exchange in September 2006. Since then, ETF Securities has listed
its ETCs on Europe’s major exchanges (Frankfurt, Paris, Amsterdam and Italy)
with each exchange creating a separate ETC segment. With Classic, Forward,
Short and Leveraged ETCs available, investors can execute most trading and
investment strategies previously not possible.
To learn more about ETF Securities go to: www.etfsecurities.com
This press release does not constitute or form part of any offer or invitation to sell or issue, or any
solicitation of any offer to purchase or subscribe for, any transferable securities to be issued by ETFS
Commodity Securities Limited or any other securities, nor shall it or any part of it nor the fact of its
distribution form part of or be relied on in connection with any contract or investment decision relating
thereto. Any offer, invitation or solicitation shall be made solely by means of the prospectus and
recipients of this advertisement who are considering a purchase of securities following distribution of
the prospectus in connection therewith are reminded that any such purchase should be made solely
on the basis of the information contained in such prospectus and any supplementary prospectus(es).
This advertisement does not constitute any recommendation regarding the securities of ETFS
Commodity Securities Limited.
The communication of this press release is not being made by, and this press release has not been
approved by, an authorised person for the purposes of section 21 of the Financial Services and
Markets Act 2000 (the “FSMA”). Accordingly this press release is not being distributed to, and must
not be passed on to, the general public in the United Kingdom. The communication of this press
release or any other document issued in connection with the offer and sale of the ETCs is only being
made to and directed at those persons in the United Kingdom falling within the definition of
Investment Professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the “Order”), or high net worth entities, and other persons to
whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order or any
person to whom it may otherwise lawfully be made (all such persons together being referred to as
“relevant persons”). The communication of this press release (or any other document issued in
connection with the offer and sale of the ETCs) must not be acted upon or relied upon by persons who
are not relevant persons. Persons distributing this press release must satisfy themselves that it is
lawful to do so. All applicable provisions of the FSMA must be complied with in respect of anything
done in relation to the ETCs in, from or otherwise involving the United Kingdom.
This is not an offer of securities for sale in the United States. Securities issued by Commodity
Securities Limited (“ Securities”) have not been and will not be registered under the US Securities Act
or any other applicable law of the United States. These Securities are being offered and sold only
outside the United States to non-US persons in reliance on the exemption from registration provided
by Regulation S of the US Securities Act. The Issuer has not been and does not intend to become
registered as an investment company under the Investment Company Act and related rules. These
Securities and any beneficial interest therein may not be reoffered, resold, pledged or otherwise
transferred in the United States or to US persons. If the Issuer determines that any Security Holder is
a Prohibited US Person (being a US Person who is not a "qualified purchaser" as defined in the
Investment Company Act), the Issuer may redeem the Securities held by that Security Holder in
accordance with the provisions described in the Prospectus. The Securities may not be purchased
with plan assets of any "employee benefit plan" within the meaning of section 3(3) of the United
States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any "plan"
described in section 4975(e)(1) of the United States Internal Revenue Code of 1986, as amended (the
"Code") or any entity whose underlying assets include "plan assets" of any of the foregoing by reason
of an employee benefit plan's or other plan's investment in such entity, which employee benefit plan,
plan or entity is subject to Title I of ERISA or section 4975 of the Code or any United States Federal,
state, or local law or non-United States law that is substantially similar to the prohibited transaction
provisions of section 406 of ERISA or section 4975 of the Code (any such employee benefit plan, plan
or entity, a "Prohibited Benefit Plan Investor"). If the Issuer determines that any Security Holder is a
Prohibited Benefit Plan Investor, the Issuer may redeem the Securities held by that Security Holder in
accordance with the provisions described in the Prospectus relating to those Securities."
“Dow Jones,” “AIG®” “Dow Jones-AIG Commodity IndexSM,” “DJ-AIGCISM”, “Dow Jones-AIG
Commodity 3-Month Forward Index” are service marks of Dow Jones & Company, Inc. and American
International Group, Inc. (“American International Group”), as the case may be, and will be licensed
for use for certain purposes by ETF Securities Ltd. ETCs based on the DJ-AIGCISM or related subindices
(including single commodity sub-indices) or 3-Month Forward Indexes are not sponsored,
endorsed, sold or promoted by Dow Jones, AIG Financial Products Corp. (“AIG-FP”), American
International Group, or any of their respective subsidiaries or affiliates, and none of Dow Jones, AIGFP,
American International Group, or any of their respective subsidiaries or affiliates, makes any
representation regarding the advisability of investing in such product(s).
To obtain a copy of the prospectus please visit the website at
www.etfsecurities.com
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