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ETF Securities’ Commodity ETC Assets Rise $9bn in 2009 to $16bn as
Demand for Gold, Energy, Agriculture and Other Hard Assets Surge
14/01/10
- Record breaking year for commodity ETCs, with assets up over $9bn
(2.3X end-2008 levels) to $16bn
- ETFS Copper (COPA) up 130% and ETFS Physical Palladium (PHPD)
up 114%, 2 of top 5 best performing long ETFs/ETCs listed on the
London Stock Exchange
- ETFS Industrial Metals (AIGI) best performing commodity basket in
2009, up 80%
- Physically-backed precious metal ETC holdings – gold, silver,
platinum, palladium - reach historic highs
- ETFS Forward All Commodities DJ-UBSCI-F3SM (FAIG) up 263% over
the past 10 years, making commodities the top performing major
asset class over the period
Commodities bounced back strongly in 2009 following the recent credit crisis, with ETFS
Forward All Commodities DJ-UBSCI-F3SM (FAIG) up 23% over the year and 263% over the
past 10 years. ETFS Industrial Metals (AIGI) was the best performing sector, up 80% over the
past year. Industrial metals significantly outperformed developed market equities,
outperforming the Dow Jones Euro STOXX 50 by 48 percentage points in 2009. Industrial
metals have also outperformed bonds, cash and real estate over the same period as the global
recovery has become more entrenched and market appetite for plays on the recovery has
accelerated. The precious metals sector was the next best performing major sector, with ETFS
Physical Silver (PHAG), ETFS Physical Platinum (PHPT) and ETFS Physical Palladium (PHPD) all
returning over 50% in 2009.
Commodities were the best performing major asset class over the past 10 years, with ETFS
Forward All Commodities DJ-UBSCI-F3SM (FAIG) rising by 263%, compared to a 2% rise in the
Dow Jones Euro STOXX 50, a 9% rise in the FTSE 100, a 7% rise in property1 and 71% return
on bonds2. This outperformance was achieved with lower average annual volatility than
equities over the same period (see table below).
Asset Class Returns Compared (1 Year, and Past 10 years)
| |
Returns (USD) |
| |
1 Year |
10 Years |
Volatility3 |
| ETFS Industrial Metals |
80% |
183% |
23% |
| ETFS Forward All Commodities DJ-UBSCI-F3SM |
23% |
263% |
15% |
| FTSE 100 |
41% |
9% |
23% |
| Dow Jones Euro STOXX 50 |
32% |
2% |
24% |
| US Tracker 1-10 Yrs Bond Index |
-2% |
71% |
4% |
| UK EPRA Real Estate Index |
21% |
7% |
25% |
Source: Bloomberg
1 Property: proxied by the UK EPRA Real Estate Index
2 Bonds: Proxied by US Tracker 1-10Yrs Bond Index
3 Calculated using the annual volatility of daily returns from 31st December 1999 to 31st December 2009
2009 has been a record breaking year for commodity inflows, with assets under management
(AUM) across all of ETF Securities’ commodity ETCs rising $9 billion to $16 billion over the past
12 months. Physical gold and long natural gas ETCs have seen the largest investment demand
over 2009, with inflows of $2 billion and $1 billion respectively over the past 12 months.
In terms of investor positioning, agriculture ETCs such as ETFS Agriculture DJ-UBSCISM (AIGA)
had the highest buy/sell ratio of any sector in 2009 with a ratio of 3.1. Agriculture ETCs saw
steady interest, with net inflows in 45 of the 52 weeks in the year. Industrial metals had the
next strongest buy: sell ratio at 2.8, coinciding with the sharp rise in industrial metal prices in
2009. Although energy ETCs have seen the second largest inflows in 2009, their buy/sell ratio
was one of the lowest at 1.7 as extremely strong oil inflows in the first four months of the year
and the surge of inflows into natural gas ETCs since May were partially offset by outflows in
May and June from ETCs tracking shorter-dated oil futures returns.
Industrial metals were the strongest performing sector in 2009, up 80% over the year. Gains
were led by a 130% rise in ETFS Copper (COPA) and a 98% rise in ETFS Zinc (ZINC). ETFS
Aluminium (ALUM) remained the weakest of the industrial metals, but still managed a 34%
return. Flows into industrial metals accelerated in 2009, taking industrial metal assets to more
than twice their previous peak level seen in H1 2008. Robust Chinese demand, coupled with
stronger manufacturing activity in developed economies, has underpinned investor interest in
industrial metals.
Top 10 Long and Short ETC Performance
| Top 10 Longs |
1 Year |
| ETFS Lead* (LEED) |
133.1% |
| ETFS Copper (COPA) |
130.0% |
| ETFS Physical Palladium (PHPD) |
113.6% |
| ETFS Zinc (ZINC) |
98.3% |
| ETFS Sugar (SUGA) |
86.3% |
| ETFS Industrial Metals DJ-UBSCISM (AIGI) |
80.0% |
| ETFS Tin* (TINM) |
68.8% |
| ETFS Physical Platinum (PHPT) |
62.7% |
| ETFS Physical Silver (PHAG) |
57.5% |
| Top 10 Shorts |
1 Year |
| ETFS Short Natural Gas (SNGA) |
46.7% |
| ETFS Short Lean Hogs (SLHO) |
17.9% |
| ETFS Short Wheat (SWEA) |
17.2% |
| ETFS Short Livestock DJ-UBSCISM (SLST) |
14.8% |
| ETFS Short Live Cattle (SLCT) |
8.5% |
| ETFS Short Corn (SCOR) |
-2.5% |
| ETFS Short Grains DJ-UBSCISM (SGRA) |
-7.2% |
| ETFS Short Energy DJ-UBSCISM (SNRG) |
-9.3% |
| ETFS Short Coffee (SCFE) |
-17.0% |
| ETFS Short Agriculture DJ-UBSCISM (SAGR) |
-17.4% |
Source: Bloomberg
* ETFS Lead rose 133% and ETFS Tin rose 69% based on simulated returns using the respective
underlying DJ-UBS Sub-IndexesSM. These products were listed in November 2009.
Within precious metals, the best performing commodities were metals tied to the industrial
cycle, with ETFS Physical Palladium (PHPD) up 114%, ETFS Physical Platinum (PHPT) up 63%,
and ETFS Physical Silver (PHAG) up 57%. Gold prices reached fresh historic highs in 2009,
breaching the $1200/oz mark by the start of December and ending the year just shy of
$1100/oz. Interest in physical gold holdings was extremely strong, up 2.1 million ounces
(35%) over the past 12 months. This marks the second year of rapid growth in physical gold
holdings, which have more than doubled (up 4.4 million ounces, or $5 billion at the current
gold price) since the start of 2008. Total assets in ETF Securities’ physically-backed gold ETCs
stood at $8.9 billion at the end of December 2009, making them the largest ETF/ETC gold
holdings in Europe and the second largest ETC/ETF gold holding in the world. Other physical
precious metal ETC holdings also posted new historic highs in 2009, with physically-backed
silver, platinum and palladium ETCs seeing their metal holdings (in ounces) reach the highest
levels since inception by the end of November.
The energy sector saw mixed performance over 2009, with a 75% rise in ETFS Gasoline
(UGAS) and a 42% gain in ETFS Brent 1mth (OILB) offset by a 52% drop in ETFS Natural Gas
(NGAS). In H1 2009 sharp falls in oil prices attracted almost $1 billion of inflows into long oil
ETCs between January and May. There was some profit taking on these positions
subsequently, coinciding with $1.4 billion in inflows into long natural gas ETCs between the
start of May and the end of November. These flows suggest some rotation in investor
positioning within the sector as natural gas prices have underperformed their oil counterparts.
Agriculture saw a sharp divergence in returns with ETFS Softs (AIGS) up 44% in the 12
months to the end of December, compared to a 2% drop in ETFS Grains (AIGG). ETFS Softs
was boosted by a 86% rise in ETFS Sugar (SUGA) and a 30% rise in ETFS Cotton (COTN).
ETFS Soybeans (SOYB) was up 23% while ETFS Wheat (WEAT) was down 26% and ETFS Corn
(CORN) was down 10%. Agriculture saw the most consistent and third largest inflows (behind
energy and precious metals) in 2009 totalling over $1 billion. Historically low levels of
inventories, together with a number of weather-related crop disruptions this season, have
helped underpin investment demand in agriculture in 2009.
Nicholas Brooks, Head of Research and Investment Strategy, commenting on the
2009 performance numbers said:
“Demand for commodity ETCs was incredibly strong in 2009 and this has continued into 2010.
ETF Securities assets under management in commodity ETCs in 2009 rose by $9bn to end the
year at $16bn on the back of strong demand for gold and other physically-backed precious
metal ETCs as well as energy, agriculture and industrial metal ETCs. Assets under
management in our ETCs are now 60% higher than they were in July 2008 before the financial
crisis broke out. Most of the demand has been for long exposure, with investors’ building their
holdings of “hard assets” for their strong long-term supply-demand fundamentals, as well as
their potential to hedge against inflation and currency debasement risks as government
finances deteriorate and central banks keep the liquidity taps open.”
For further information, please contact:
Helen Burden
Tel: +44 (0) 20 7448 4330
Email: helen.burden@etfsecurities.com
Commodity Review 2009 and Outlook 2010
Date: Thursday 21st January 2010
Time: 11:00am and 15:00pm London Time
Speaker: Nicholas Brooks, Head of Research and Investment Strategy, ETF Securities Ltd
This call will discuss:
Asset class review: Commodity performance in perspective
ETC Flows: what can they tell us?
Commodities performance and key drivers
Energy: Aggressive Rotation
Precious Metals: Cyclicals take the Lead
Industrial Metals: the China Factor
Agriculture: Grains vs Softs
Summary and Conclusions: Implications for Future Returns
Click here to register your place today http://www.etfsecurities.com/en/events/etfs_events_calls.asp
Notes to Editors:
ETF Securities is a provider of Exchange Traded Commodities (Commodity ETCs), Exchange Traded
Currencies (Currency 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 ETC platform which was first listed
on the London Stock Exchange in September 2006.
ETFS Exchange Traded Products (ETPs) provide investors with a wide variety of investment strategies,
with ETPs offering exposure to resource equities, physical, long, forward, leveraged and short exposure to
all commodity sectors and G10 Currencies.
ETPs are simple to access as they are traded in up to five currencies (EUR, USD, GBP, AUD and JPY) and
listed on up to 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.
To learn more about ETF Securities go to: www.etfsecurities.com
Disclaimer:
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 Foreign Exchange Limited, 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. Collateralised currency securities are complex, structured products
involving a significant degree of risk and are not suitable or appropriate for all types of investor. They are aimed at sophisticated, professional
and institutional investors and any other person wishing to invest must seek appropriate financial, tax and other advice from independent
financial advisors with appropriate regulatory authorisation and qualifications.
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
Foreign Exchange Limited, 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 Foreign Exchange Limited, ETFS Commodity Securities Limited, ETFS Metal Securities Limited, ETFS Oil
Securities Limited, and Gold Bullion Securities Limited are each regulated by the Jersey Financial Services Commission. ETFS Fund Company
PLC is regulated by the Financial Regulator in Ireland.
Please visit ETF Securities website for prospectus www.etfsecurities.com
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