European Commodity ETFs Have Record Inflows

Shanny Basar

Commodity exchange-traded funds listed in Europe had record inflows in February as European ETFs have gathered net inflows for 17 consecutive months.

The consultancy ETFGI said in its February 2016 global ETF and ETP industry insights report that commodities ETFs/ETPs listed in Europe had net inflows of $2.66bn (€2.4bn) last month, beating the previous record of $2.12bn in September 2012.

In total ETFs/ETPs listed in Europe gathered net inflows of $2.92bn in February, marking net inflows for 17 consecutive months.

Deborah Fuhr, managing partner at ETFGI, said in a statement: “February was another volatile month for equity markets which drove investors to invest net flows into government bonds and gold.”

As a result equity ETFs/ETPs in Europe had net outflows of $2.19bn last month, while in contrast fixed income had net inflows of $2.12bn.

Issuer ETF Securities gathered the largest net inflows in Europe last month of $1.36bn, followed by BlackRock’s iShares with $771m and then Vanguard with $330m. Townsend Lansing, head of exchange-traded commodities at ETF Securities, said in a statement that more than 90% of inflows have been into the firm’s commodity ETPs.

“This is a true recognition of our work over many years to build out Europe’s most comprehensive range of commodity ETPs,”  added Lansing. “ETF Securities’ performance suggests that we may have in fact reached the turning point for commodities.”

ETF Securities said in its outlook for 2016 that commodities had most likely reached the point of ‘peak bearishness’ and that investors are recognising that commodities can present a good investment opportunity.

Blackrock’s ETP landscape report for February 2106 said global ETPs gathered $9.4bn last month led by gold and Treasury ETP flows as investors grappled with a jump in volatility, a plunge in oil prices and anemic global growth. Year-to-date global ETPs have collected $24.3bn, ahead of 2014 pace, but slower than last year.

“Gold funds set a new monthly flow record of $7.2bn, surpassing the previous high set in 2009,” added BlackRock. “Negative rates in Japan and Europe coupled with weak global growth have prompted a surge in interest, driving the spot price of gold above 1,200 or nearly 17% higher since the start of the year.”

European equities shed $4.2bn last month, added BlackRock, as firms in Europe, particularly financials, also had lackluster earnings and lower forecasts. “Speculation in the run-up to a United Kingdom referendum on European Union membership has put additional pressure on the European Central Bank to deliver more aggressive stimulus,” said the report.

Featured image via Comugnero Silvana/Dollar Photo Club

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