ETF Securities reports sizeable inflows into industrial metal ETFs

Nov 28th, 2017 | By | Category: Commodities

Industrial metals ETFs recorded their largest weekly inflows since August 2014, according to ETF Securities’ fund flows analysis, after the commodity segment saw $112.9 million in net new assets during the week ended 24 November 2017.

Industrial Metals ETFs ETF Securities

ETF Securities reports that its range of industrial metal ETFs recorded $112.9m in net inflows during the week ended 24 November 2017.

The firm’s products tracking industrial metals baskets, such as the ETFS Industrial Metals (AIGI LN), received the majority of the inflows ($77.3m). AIGI is primarily exposed to the price performance of copper (43.0%), aluminium (26.7%), zinc (16.0%), and nickel (14.3%). It has over $300m in assets under management (AUM) and a management expense ratio (MER) of 0.49%.

Copper exposure was also in demand, as the firm’s range of copper products netted $34.5m of inflows. The ETFS Copper (COPA LN) has $240m in AUM and a MER of 0.49%.

Nickel was the best performing industrial metal during the week with a price rise of 4%, followed by copper (3.3%), with both metals supported by increasing supply deficits, according to respective international study groups for the two metals.

Looking at factors beyond the supply deficit, Edith Southammakosane, director, multi-asset strategist at ETF Securities, commented: “Investors have been more sensitive to climate change with the latest Global Carbon Project report highlighting that carbon emissions will increase by 2% this year which makes the 1.5°C global target cap unlikely. We believe more investment into green projects, renewable energy and electric vehicles is very likely. This could be the beginning of a long-term trend that will benefit copper, nickel and other base metals.”

Turning to precious metals, the firm’s silver ETFs recorded their largest weekly inflows since September, drawing in $8.6m, despite little movement in the underlying price. Southammakosane puts this pickup in demand down to silver benefitting from the attractiveness of industrial metals.

Noting that around 8% of silver consumption is used in the making of photovoltaic cells, Southammakosane sees a positive outlook for the metal’s price as “this share is likely to increase in the next decade as the world makes the transition to a low-carbon economy”.

Investors with a similar view may wish to use the ETFS Physical Silver (PHAG LN) to play this theme. PHAG tracks the spot price of silver and has just under $900m in AUM with a MER of 0.49%.

Gold ETFs bucked the trend of net inflows, with ETF Securities reporting $31m in net outflows during the week. The firm puts these outflows down to profit-taking as the gold price closes in on the $1,300/oz. mark, and sees some potential for downward pressure ahead of an anticipated Federal Reserve December rate hike.

Lastly, the firm notes its ROBO Global Robotics and Automation GO UCITS ETF (ROBO LN) saw an additional $49m of net inflows during the week amidst a better-than-expected earnings season – 62% of the companies within ROBO’s index that have reported their earnings have outperformed analyst expectations. Continued demand for ROBO has seen the fund’s AUM rise above $1bn following these latest inflows. ROBO has a total expense ratio (TER) of 0.80%.

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