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Record ETC inflows of £430m last week, £1 Billion in past 7 weeks
26/01/09
- ETCs experience largest weekly net investment on record, with
inflows up $581m (£430m) last week, highlighting the efficient
structure of ETCs in current financial environment
- Agriculture ETC inflows up $56m (£42m) last week, the largest
weekly inflow since April 2008
- Physical gold ETCs rise by 420,000 oz in one week or $367m (£272m)
- Agriculture and gold Exchange Traded Funds (ETFs) outperform
equities by 20% over 7 weeks and 114% over 13 weeks respectively
- ETCs dominate ETF/ETC trading volumes on the LSE in 2008, with
YOY increases despite falling equity trading volumes
ETF Securities Limited, the global pioneer of Exchange Traded Commodities (ETCs)
and provider of Exchange Traded Funds (ETFs), is seeing consistent strong inflows
into ETCs. Steady inflows into ETCs have been recorded every week for the past
eleven weeks, going back to 7 November 2008. Of those past 11 weeks, $1,570m
(£1,150m) has flowed into ETCs with gold and oil contributing 90%. More recently,
agriculture ETCs have also begun to experience significant inflows. The strong
inflows are a result of both commodities low to negative correlation with equities,
and also the robust structure of ETCs.
Because of the current financial environment, investors are now demanding liquid,
transparent and secure structures to safeguard assets. As a result, ETF Securities
experienced its largest weekly inflow into ETCs ever. A total of $581m (£430m)
flowed into ETCs last week, of which 63% went into physical gold ETCs, 20% into oil
ETCs and 10% into agriculture ETCs.
Last week, inflows into ETFS Physical Gold (PHAU) and Gold Bullion Securities (GBS)
was the largest weekly inflow on record - 420,000 ounces worth of ETCs were issued,
equivalent to the quarterly production of the world’s sixth largest gold company.
Combined, the assets of PHAU and GBS now total $5.3 billion (£3.9bn) or 6 million
ounces. Last week, the gold price rose from $835/oz to $899/oz, a weekly increase
of 8% in USD terms and a weekly increase of 15% in GBP terms. And despite falling
equity prices, ETFS Russell Global Gold Fund (AUCO), an Exchange Traded Fund
(ETF) was up 9% in USD last week (15% in GBP) and 106% since 27th October 2008,
outperforming the FTSE 100 Index by 114% in USD terms.
A significant departure from the past few weeks was new investment into agriculture
ETCs. In total, $56m (£42m) was invested across a range of agriculture ETCs with
ETFS Agriculture DJ-AIGCISM (AIGA) taking in $48m (£36m) and ETFS Wheat (WEAT)
taking in $6m (£4.5m). Last week was the largest weekly inflow into agriculture
ETCs since April 2008. Agriculture is beginning to receive renewed interest from
investors as it is widely perceived to be more independent of the current financial
crisis. In addition, inventories of a number of agriculture commodities remain at or
near historic lows, while there has been some reduced plantings and poor weather in
North and South America recently. As a result, all agriculture ETCs are up by around
20% since early December (see chart below of ETC prices, all numbers in USD).
|
05 Dec 08 |
23 Jan 09 |
% change |
| ETFS Agriculture (AIGA) |
4.95 |
6.07 |
22.6% |
| ETFS Softs (AIGS) |
3.97 |
4.72 |
18.8% |
| ETFS Grains (AIGG) |
4.16 |
5.24 |
25.9% |
| ETFS Coffee (COFF) |
2.24 |
2.60 |
15.8% |
| ETFS Corn (CORN) |
1.29 |
1.62 |
26.1% |
| ETFS Cotton (COTN) |
1.20 |
1.46 |
22.3% |
| ETFS Soybean Oil (SOYO) |
5.56 |
6.45 |
16.1% |
| ETFS Soybeans (SOYB) |
11.04 |
14.12 |
27.9% |
| ETFS Sugar (SUGA) |
10.79 |
12.94 |
20.0% |
| ETFS Wheat (WEAT) |
2.30 |
2.82 |
22.4% |
Source : ETF Securities
Since 5th December, agriculture related equities have also outperformed with the
ETFS S-Net ITG Global Agri Business Fund (AGRI) ETF up 14% since 5th December
2008, outperforming the FTSE 100 Index by 20.1% in USD terms.
Long oil ETC continue to receive significant net inflows with oil remaining below $50
per barrel. Last week, a further $143m (£106m) of inflows were received into oil
ETCs with ETS Brent Oil (OILB) and ETFS Crude Oil (CRUD) remaining the two
largest oil ETCs with $236m (£175m) and $377m (£279m) in OILB and CRUD
respectively. ETFS Leveraged Crude Oil (LOIL) remains the largest leveraged ETC
with $84m (£62m) of assets. In total, there has been net inflows into oil ETCs of
$629m (£465m) since the start of December, resulting in asset growth of 450% to
total $808m (£596m).
Exchange volumes for ETCs have increased across all exchanges despite falling
commodity prices and up to a 50% fall in equity trading volumes. In 2008, the USD
value of ETC trading volumes on the London Stock Exchange increased 22%
compared to the same time last year, while ETC trading volumes on the Deutsche
Borse, Borsa Italiana and Euronext are up 200%, 46% and 77% respectively. In
total, weekly ETC trading volumes are up by 31% to $600m (£444m) since January
2008. According to a recently published London Stock Exchange newsletter, 3 of the
top 4 ETFs/ETCs traded on the LSE are ETCs with Gold Bullion Securities (GBS), ETFS
Physical Gold (PHAU) and ETFS Short Oil (SOIL) being the most traded ETCs in
London for 2008.
The collateralisation of many of ETF Securities’ ETCs is also proving to be popular
among investors. Last year, ETF Securities collateralised over 120 of its ETCs which
track a range of DJ-AIG Commodity IndicesSM. The collateralisation was achieved
using a range of highly rated securities and cash (details are available in the
Supplementary Prospectus), thus significantly reducing exposure to credit risk. In
addition, ETF Securities’ six physically backed precious metal ETCs are 100% backed
by “allocated” physical gold LBMA bars. Allocated gold is not subject to any credit
risk, unlike many gold accounts or unallocated gold. With the structure of ETCs also
clearly explained in the relevant Prospectus, ETCs remain an extremely transparent
investment.
Commenting, Nik Bienkowski, Chief Operating Officer, at ETF Securities,
said:
“In the last two months of 2008 and continuing this year, investors are seeking
assets which are liquid, secure and transparent. Exchange traded commodities
(ETCs) solve these issues and as a result, its not surprising that record flows of
$581m (£430m) were experienced across a range of ETCs. In addition, ETCs
generally have low to negative correlation to equities and bonds.
“With oil prices around $45/bl, credit risk an issue and a number of well published
issues in the agricultural market, ETCs provide an ideal structure to take advantage
of these themes. As a result, a number of collateralised products including ETFS
Physical Gold, ETFS Agriculture and ETFS Crude Oil have all experienced record
inflows over the past few weeks. These record flows are proof that investors are
willing to invest their money in secure and transparent structures.”
For further information, please contact:
Helen Burden
Tel: +44 (0) 20 7448 4330
Email: helen.burden@etfsecurities.com
ETF Securities continues its series of conference calls for finance
professionals:
Fundamental Drivers of Agriculture Prices - 3rd February 2009
Time: 11:00am and 15:00pm London Time
This call will discuss:
- Market Overview
- Fundamental drivers of Agriculture prices
- How to Invest in Agricultural Commodities
- Investment Statistics and Application
- Agricultural ETF's Performance
- Summary and conclusions
- Question and answer session
To register your place today:
http://www.etfsecurities.com/en/events/etfs_events_calls.asp
Notes to Editors:
ETF Securities Ltd is a provider of Exchange Traded Commodities (ETCs) and
Exchange Traded Funds (ETFs). ETF Securities is independently owned is the
European market leader in ETCs. The management of ETF Securities pioneered the
development ETCs, with the world's first listing of an ETC, Gold Bullion Securities in
Australia and London in 2003 and then the world's first entire ETC platform which
was listed on the London Stock Exchange in September 2006. ETF Securities has
most recently launched the largest platform of thematic sector ETFs in Europe
providing exposure to European firsts such as Coal, Steel, Shipping and Nuclear
Power.
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 securities (together the "Securities")of ETFS Commodity Securities
Limited, ETFS Metal Securities Limited or ETFS Oil Securities Limited or any shares (the "Shares") of ETFS Fund
Company public limited company (the "Fund") or any other shares or 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 relevant prospectus
(plus any supplements thereto) in the case of the Securities or the prospectus together with the relevant subfund
supplement in the case of the Shares (in each case the "Prospectus") and recipients of this advertisement
who are considering a purchase of Securities or Shares following distribution of the Prospectus are reminded that
any such purchase should be made solely on the basis of the information contained in such Prospectus. This
advertisement does not constitute any recommendation regarding the Securities or the Shares.
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 Shares or Securities 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 Shares or Securities) must not be acted upon or relied upon by persons who are not relevant
persons. The Fund is a collective investment scheme for the purposes of the FSMA and is a recognised scheme for
the purposes of the FSMA. 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
Shares or Securities in, from or otherwise involving the United Kingdom
This is not an offer of securities for sale in the United States. The Shares and Securities have not been and will
not be registered under the US Securities Act or any other applicable law of the United States. The Shares and
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. None of ETFS Commodity
Securities Limited, ETFS Metal Securities Limited, ETFS Oil Securities Limited and ETFS Fund Company public
limited company (each an "Issuer") has been or intends to become registered as an investment company under
the United States Investment Company Act of 1940 (as amended) (the "Investment Company Act") and related
rules. Neither the Shares nor the Securities or any beneficial interest therein may be reoffered, resold, pledged or
otherwise transferred in the United States or to US persons. If an Issuer determines that any holder of shares is a
US Person or any holder of Securities 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 Shares or Securities (as the
case may be) held by that Security Holder in accordance with the provisions described in the Prospectus. Neither
the Shares nor the Securities may 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 or Shares held by that person in accordance with the provisions described in the relevant
Prospectus.
"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 are licensed for use for certain purposes by ETF
Securities Ltd. ETCs based on the DJ-AIGCISM or related sub-indices (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, AIG-FP, American International Group, or any of their respective subsidiaries or affiliates, makes any
representation regarding the advisability of investing in such product(s).
ETF Securities Limited, ETFS Commodity Securities Limited, ETFS Metal Securities Limited, ETFS Oil Securities
Limited, Gold Bullion Securities Limited and ETFS Fund Company PLC are each regulated by the Jersey Financial
Services Commission.
To obtain a copy of the prospectus please visit the website at www.etfsecurities.com
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