Bloomberg News

Commodity ETP Inflows Fell 29% Through July, Barclays Says

September 14, 2011

(Adds analyst’s comments starting in third paragraph.)

Sept. 14 (Bloomberg) -- Investors placed 29 percent less cash in commodity exchange-traded products in the first seven months of the year, Barclays Capital said in a report.

Commodity-based ETP inflows totaled about $7.8 billion, down from from $11 billion a year earlier, Barclays Capital analyst Roxanna Mohammadian-Molina said today in the e-mailed report. Investors cut inflows into commodities even as economic news pushed up gold prices by 15 percent in the year through July and Standard & Poor’s GSCI Index of raw materials gained 8.6 percent.

“This picture across the mainly retail investor-driven ETP market contrasts with the rising official sector appetite for gold, the healthy demand for physical gold and the increase in net-long positions in the futures markets,” Mohammadian-Molina wrote in the report. “Despite the sheer number of potentially damaging risks affecting the economy, commodity-linked ETPs have seen weak inflows.”

Gold futures in New York rose to a record $1,923.70 an ounce on Sept. 6 as investors sought to protect their wealth from slowing economies in the European Union and the U.S.

Inflows into precious metal ETPs shrunk by two-thirds in the year through July, Barclays said. Base-metal ETPs had their largest outflow of money on record in August while agriculture- based products saw a fifth consecutive monthly outflow, according to the report. Commodities have still fared better than most asset classes, Mohammadian-Molina said.

“We’ve had some months in which we’ve seen the big outflows,” Mohammadian-Molina said by phone. “It’s important to realize that commodities markets have held up much better than some markets such as the equities.”

--Editors: John Deane, Stuart Wallace

To contact the reporter on this story: Tony C. Dreibus in London at tdreibus@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net


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