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ETF Securities Assets Surge Through US$6 Billion
26/06/08
- ETF Securities assets broke through $6 billion this week,
an increase of 500% ($5bn) over the past 12 months
- Precious metal and agriculture Exchange Traded Commodities (ETCs)
grow by $2.4 billion and $1.6 billion over the past 12 months
- ETCs dominate LSE trading with 6 of the top 10 ETCs/ETFs,
with gold and oil being the most heavily traded ETCs
- Gold ETCs trade $6 billion (approx 6.5 Moz) on the London Stock
Exchange this year
- Short, Leveraged and Forward ETC assets rise to over $800 mn in just
8 months, with ETFS Short Oil adding $260 mn in 4 months
ETF Securities Limited, the global pioneer of exchange traded commodities
(ETCs), has seen assets top $6 billion as demand for Exchange Traded
Commodities continues to grow at an exponential pace. This demand has come
as financial market volatility has caused investors to seek refuge in assets which
have low correlation to equities. Commodities are one of the few asset classes
which have not been affected by the global credit turmoil, showing returns of over
35% in the past 12 months and 25% year to date compared to a 10% decline in
the S&P 500.
The push through the $6bn AUM mark was driven by strong demand for a wide
range of ETCs including Precious Metals, Agriculture and more recently Livestock.
Over the past 12 months, in order of popularity, ETFS Physical Gold (PHAU) has
seen AUM rise by over $1bn, ETFS Agriculture (AIGA) (the broadest agriculture
ETC) $890mn, ETFS Physical Platinum (PHPT) $740mn and ETFS Short Crude Oil
(SOIL) (listed 22 Feb) $240mn.
Trading volumes of ETCs have exploded this year and are rivalling the major
equity indices. 6 of the top 10 ETFs/ETCs traded on the LSE are ETCs with ETFS
Physical Gold (PHAU) being the most traded ETC in London. Physical gold ETCs
have traded $6 billion (approx 6.5 million ounces) on the LSE in 2008, almost
trading more than the FTSE100 ETF. Oil was the second most traded commodity
in May. Total oil ETC volume topped $500 million with volumes for ETFS Short Oil
(SOIL) beating ETFS Brent Oil (OILB). Platinum was third with monthly volumes
of $250 million.
Precious metal ETCs continue to show the strongest demand as the credit crisis
continues to affect the equity and housing markets. Coupled with this, continued
political instability and tight supply conditions have proved supportive of prices
this year. ETFS Physical Gold (PHAU) added $560 million this year and over $1bn
in new assets over the past 12 months, making it the most popular ETC during
the period. This was closely followed by ETFS Physical Platinum (PHPT) which has
added $470mn in new flows this year and increased assets by $740mn over the
past twelve months. ETFS Physical Palladium (PHPD) also added almost $100mn
this year, increasing assets 10% last week alone. ETF Securities’ two precious
metals basket ETCs have also been popular, adding $150mn this year with assets
in ETFS Physical PM Basket (PHPM) and ETFS Precious Metals DJ-AIGCISM (AIGP)
now exceeding $310 million. Precious metals now contribute 45% to ETF
Securities assets.
Demand for ETFS Short Crude Oil (SOIL) has continued to rise at an extremely
rapid rate, with inflows increasing by $30mn last week, bringing total inflows to
over $260mn since listing in late February, second only to ETFS Physical Gold
(PHAU) during the period. Hedging activity and pair trading appear to be key
drivers of demand for this Short ETC, though directional views are also likely
playing a role as oil prices continue to hover near all time highs.
Although having been listed for only around 4 months, Short and Leveraged ETCs
have seen strong interest with a total of $450mn of inflows since listing. ETFS
Leveraged Wheat, ETFS Leveraged Silver (LSIL) and ETFS Leveraged Gold (LBUL)
have been the most popular leveraged products, while ETFS Short Oil (SOIL) and
Short Industrial Metals (SIME) have been the most popular shorts. Forward ETCs
have seen over $300mn of inflows since listing around October last year. The
range of long, short, leveraged and forward ETCs now allows investors to execute
almost any kind of commodity investment strategy.
Livestock ETCs have also seen a sharp rise in interest recently, with assets rising
550% this year from $40mn to $260mn. ETFS Lean Hogs (HOGS) has been the
most popular, growing to $70 million in assets including one trade of $40 million,
while trading volumes over the past 15 weeks have increased by over 2,000%
compared to the same period last year. This interest in Livestock ETCs comes as
a result of investors looking for non-correlated assets to equities. Much of the
growth has been in the last few months as investors appear to be anticipating a
turnaround in the livestock cycle and also likely due to investors using these ETCs
to broaden their exposure to commodities other than Agricultural and Precious
Metals ETCs.
ETF Securities now offers more than 120 ETCs which give investors greater choice
to implement different investment strategies with the choice of physical, long,
forward, leveraged and short exposure to a wide range of commodity sectors.
ETCs are simple to access as they are traded in three currencies (Euros, USD and
Sterling) and listed on five major European Exchanges including the London Stock
Exchange, Euronext Paris, Euronext Amsterdam, Deutsche Borse and Borsa
Italiana. Each Exchange has created unique ETC trading segments resulting in
trading volumes exploding by 500% to between $600 and $800 million per week.
Commenting, 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
metals, oil and agricultural ETCs as investors seek to diversify their portfolios
away from equities and real estate. In financial environments like these,
investors are realising the benefits of low to negative correlation, thus an
allocation to commodities could have reduced this volatility in addition to
increasing returns.
“Reaching $6 billion in assets is a significant milestone. With ETCs being some of
the most highly traded products in Europe, the market reaction is proof to the
success of our ETCs. "The growth of ETFS Short Oil and our Livestock ETCs are
proof that accessibility, liquidity and transparency are key to the success of ETCs.
“The management of ETF Securities developed the world’s first ETC almost six
years ago. Our team has doubled in the past year to more than 35 people as ETF
Securities continues the development of this rapidly expanding and innovative
investment sector by delivering award winning products.”
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:
Title: The Fundamentals of Livestock
Date: 3rd July
Time: 11:00am and 15:00pm London Time
Click here to register
www.etfsecurities.com/en/events/etfs_events_investor.asp
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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