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ETF Securities’ Assets rise to All-Time High of $15bn
as Investor Demand for Hard Assets Continues
28th September 2009
- Physically-backed gold ETCs see AUM rise by over $1.1bn over the past six weeks due to investor demand for US dollar and inflation hedge.
- ETFS Physical Palladium and ETFS Physical Platinum assets reach new highs, up 219% and 111% respectively this year.
- Natural gas ETCs see over $1bn inflows, driving natural gas ETC AUM to a record $1.3bn as natural gas prices rally sharply.
- Agriculture ETCs assets rise to $1.4bn, up 134% this year on supportive fundamentals.
- Resource-equity related ETFs show stellar performance this year, with ETFX Russell Global Coal Mining Fund up over 110% this year.
ETF Securities’ assets under management (AUM) have surged to an all-time high of $15bn on the back of strong investor interest in hard assets as deteriorating government finances and aggressive quantitative easing policies raise concerns about the outlook for the US dollar, British pound, other major currencies and medium-term inflation risks. AUM has increased by $7.9bn this year, with 78% of the increase driven by investor inflows, as ETF Securities expanded its geographical coverage with precious metals ETCs listings on the New York and the Tokyo Stock Exchanges (NYSE Arca and TSE).
Demand for physically-backed precious metal ETCs has been a key factor behind the rise, with ETF Securities’ physically-backed gold and palladium ETC holdings seeing new all time highs and platinum holdings hitting a high for the year. Inflows into ETFS’ gold ETCs have been particularly strong, with ETFS Physical Gold (PHAU) and Gold Bullion Securities (GBS) seeing a $97mn increase on the week, bringing ETFS’ total gold holdings to a new record of 8.4mn ounces ($8.4bn), up 39% since the beginning of the year.
Flows into the gold ETCs have shown low sensitivity to downward movements in the gold price highlighting that the largest buyers of gold ETCs are institutional investors buying the metal as a long-term hedge against inflation, US dollar depreciation and other risks, rather than as short term trading instruments. The signal ETC holdings are sending is that most large investors’ believe these risks may continue to rise.
ETFS Physical Platinum (PHPT) holdings hit their highest level this year on Friday 25 September, rising to 360,949 ounces, equivalent to $467mn on current prices. Demand for PHPT and ETFS Physical Palladium (PHPD) have risen sharply from their lows of last year, with holdings up 111% and 219% respectively since the beginning of the year. The rebound in auto sales this year together with a pick-up in key lead manufacturing indicators has driven a sharp rise platinum and palladium prices and investors’ are increasingly using PHPT and PHPD as a way to get direct access to these returns.
The popularity of ETCs has not been limited to precious metals. AUM in ETCs tracking the DJ-UBS Commodity indices now stands at $4.5bn, up 251% since the end of 2008. Natural gas ETCs have seen over $1bn inflows this year, driving natural gas ETC AUM to a record $1.3bn as the DJ-UBS Natural Gas Sub-Index has rallied sharply over the past 4 weeks (up 35%). Agriculture ETCs have also seen strong investor interest with total assets in agriculture ETCs rising to $1.4bn, up 134% this year. Expected supportive long-term price fundamentals and potential near-term supply disruptions from a possible El Nino weather event later this year also appear to be playing a role in driving investor flows.
The ETFX equity ETF platform has seen strong trading growth since the introduction of thematic ETFs in fourth quarter of 2008, and 2x short and 2x leveraged equity ETFs at the end of the June quarter 2009. Basic resource themed ETFs have seen particularly strong returns, led by a 111% increase in the ETFX Russell Global Coal Mining Fund (COAL) and an 89% rise in the ETFX Dow Jones STOXX 600 Basic Resources Fund (BRES) YTD. ETFX Funds now have over $200 million AUM, up 100% in the past two months.
ETF Securities continues to open up the precious metals market with recent listings of a full precious metals platform on the Tokyo Stock Exchange and of ETFS Physical Silver Trust (SIVR) and ETFS Physical Swiss Gold Trust (SGOL) on the New York Stock Exchange. SGOL is the first Gold ETF backed by gold vaulted in Switzerland available to US Investors. In Japan, the launch of the ETFS Precious metals platform brings first time access to silver, platinum, palladium and a precious metals basket to Japanese investors through ordinary brokerage accounts. The platform also includes gold which is ETF Securities’ most successful Commodity ETF and which was also pioneered by ETF Securities in 2003.
Notes to Editors:
ETF Securities is a provider of Exchange Traded Commodities (ETCs) and 3rd generation Exchange Traded Funds (ETFs). The management of ETF Securities pioneered the development of 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.
The vision for 3rd generation ETFs was pioneered by ETF Securities. The idea was inspired by investor demands for increased levels of transparency, liquidity and counterparty risk management. ETF Securities identified that the current ETF issuance model by single financial institutions could be strengthened by diversifying index replication across a consortium of the strongest financial players and concentrating liquidity within a single platform. Under the current ETF issuance model, if the sponsoring / issuing financial institution fails, it is highly likely that their respective ETFs would be greatly disrupted and potentially liquidated.
ETF Securities will now offer a total of 21 equity ETFs comprising Europe’s first complete platforms of resource-equity ETFs and double leveraged (2x) and double short (-2x) ETFs. These ETFs are listed on 5 European exchanges (the London Stock Exchange, Deutsche Borse, Euronext Paris, Euronext Amsterdam and the Borsa Italiana) and traded in 3 currencies (USD, EUR and GBP). They are part of the ETF Exchange initiative driven by client demand for increased liquidity, innovative products and reduced credit risks and counter-party exposure. The ETFs are all swap-backed ETFs using multiple counterparties, allowing more efficient tracking, with collateral being held in excess of UCITS guidelines. This issuance model is arguably the most efficient and risk averse available today.
The Exchange Traded Products (ETPs) provide investors with a wide variety of investment strategies, with ETPs offering resource equities, physical, long, forward, leveraged and short exposure to all commodity sectors. ETPs are simple to access as they are traded in five currencies (EUR, USD, GBP, AUD and JPY) and listed on nine major exchanges globally including the London Stock Exchange, the New York Stock Exchange, the Tokyo Stock Exchange, NYSE-Euronext Paris, NYSE-Euronext Amsterdam, Deutsche Börse, Borsa Italiana, the Australian Securities Exchange and the Irish Stock Exchange.
For further information, please contact:
Helen Burden
Tel: +44 (0) 20 7448 4330
Email: helen.burden@etfsecurities.com
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 sub-fund 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.
“None of the index providers of the relevant ETFs referred to herein nor their licensors make any warranty or representation whatsoever either as to the results obtained from use of the relevant indices and/or the figures at which such indices stand at any particular day or otherwise. None of the index providers shall be liable to any person for any errors or significant delays in the relevant indices nor shall be under any obligation to advise any person of any error or significant delay therein.” “Dow Jones,” “UBS”, DJ-UBSCISM,”, “DJ-UBSCI-F3SM,” and any related Indices or Sub-Indices are service marks of Dow Jones & Company, Inc. (“Dow Jones”) and UBS AG (“UBS”), as the case may be, and have been licensed for use by the Issuer. The Securities although based on components of the Dow Jones UBS Commodity Index 3 month Forward SM (formerly known as the Dow Jones –AIG Commodity Index 3 Month Forwards SM) are not sponsored, endorsed, sold or promoted by Dow Jones, UBS, or any of their respective subsidiaries or affiliates, and none of Dow Jones, UBS, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product. ETF Securities Limited and each Issuer are regulated by the Jersey Financial Services Commission.
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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