Commodity funds assets under management (AUM) have started growing again. The peak was reached around the end of QE2 (summer of 2011). Since then the inflows weakened until investors began to anticipate a new round of monetary expansion from the Fed. The growth resumed this past summer (particularly in late August) in spite of weak global fundamentals.
Barclays: - Given the difficult regulatory backdrop, a slowing Chinese economy and the wide range of Macro-economic and financial market risks currently hanging over investors, this is a positive result for a sector that has been under pressure for most of the year-to-date. Whilst the net flow of funds into commodity investments for the year to date at just $7bn remains a long way below last year’s $25bn in the first eight months of the year, the consistent inflows over the past 3 months suggest a turning point in investor flows may have been reached.
|Source: Barclays Capital|
A big portion of the increase has been driven by precious metals, as funds such as GLD (SPDR Gold Trust) AUM hit new records. With the CFTC proposal to impose limits overruled in court (see discussion), growth in the AUM of commodity exchange traded products should resume.
|Shares outstanding of GLD|