Commodities see explosive growth
ETF Securities has experienced explosive growth as investors look for alternatives to the equity markets
ETF Securities, which specialises in exchange traded funds tracking commodities, has seen total assets under management grow in the past 5 weeks by 25 per cent to over $2.9 billion.
Last week alone its assets under management grew by over $170 million as more investors adjust their exposure to equities and bonds and pile into a so-called "commodities bull market".
In addition, the firm's forward exchange traded commodities, which are the first ever listed products to track new Dow Jones - AIG forward commodity indices, are proving popular among those seeking to make a strategic allocation to commodities.
The Forward ETCs have gained over $130 million of assets since their launch in October 2007 with 200 per cent growth in the past 4 weeks alone.
The asset growth is largely due to precious metals and agriculture ETCs, which have both seen the greatest AUM increase and also highest returns over the past 6 weeks, said ETF Securities in a statement.
Nik Bienkowski, head of listing and research, said: "News regarding the effects of the sub-prime crisis with new reports of significant capital raisings being made by the world's major investment banks is adding to the flow of negative news surrounding the financial markets. It is during these times that commodities and precious metals have tended to outperform.
"On average, when equities experienced a negative 12-month return, commodities showed a positive 12-month return approximately 70 per cent of the time," he added.
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