By Nick Leung, Research Analyst at WisdomTree.
Turnover in WisdomTree’s range of leveraged oil exchange-traded funds hit a record high of $10bn in 2016 as investors moved to exploit the dramatic recovery in the energy price. As with oil, the majority of trades in gold were focused on the leveraged long side, with $474m invested in leveraged longs versus $187m in short positions. The assets may see further interest on the leveraged long side in 2017 if recent price momentum is maintained.

Source has unveiled the Source Bloomberg Commodity UCITS ETF (LON: CMOD), a new fund tracking the well-known Bloomberg Commodity Index, and the latest addition to the firm’s “portfolio essentials” range of ETFs. At a cost of 0.40% per annum, investors may receive diversified exposure to over 20 commodities across the agriculture, energy, industrial metals, precious metals and livestock sectors. The fund will compete with existing funds from ETF Securities and UBS which track the same index.

State Street Global Advisors (SSGA) has published its 2017 Investment Outlook report, suggesting three strategies to help navigate a political and investment environment that underwent global seismic shifts during 2016. In the face of heightened uncertainty, the firm recommends seeking income at a reasonable risk by extending past traditional bond exposures, positioning one’s portfolio for a reflationary environment, and seeking to mitigate episodic volatility through the use of safe haven assets and smart beta equity allocations.

Despite analysts predicting a flight from risky assets in the event of Donald Trump winning the US Presidency, it appears as though the opposite has happened, with large inflows into US equity ETFs, particularly financials (+$8.2bn), industrials (+$3.5bn) and healthcare (+$2.0bn), being recorded during November. Gold ETFs, traditionally a safe haven asset, lost $4.5bn in net outflows. Ursula Marchioni, Chief Strategist for iShares EMEA, commented: “The results triggered inflows into US equity ETFs on expectations of President-elect Trump’s pro-growth policies.”

BNP Paribas has launched two new exchange-traded commodities, on Deutsche Börse’s Xetra and Frankfurt exchanges tracking the price performance of gold and palladium. The BNPP Gold ETC (BNQJ) and the BNPP Palladium ETC (BNQL) are based on the cash price in US dollars for a troy ounce of their underlying precious metal. Each ETC has a total expense ratio of 0.99%.

Shrugging off a weak start in the first two weeks of 2016, exchange-traded funds tracking the natural resources sector have enjoyed significant growth throughout the rest of the year – the VanEck Vectors Natural Resources ETF (NYSE: HAP) is up 22.1% year-to-date, as of 30 November 2016. Despite the strong performance, VanEck argues that energy and mining stocks are only in the early stages of a cyclical rebound, setting the sector up for further growth in 2017.

London-based ETF Securities has announced that investors pulled $274m from their gold ETPs and $126m from their long oil ETPs during the week ended 2 December 2016, marking the largest outflows from these funds since July 2015 and August 2010 respectively. Nitesh Shah, Director, Commodities Strategist, ETF Securities has attributed the outflow from oil ETPs to savvy investors taking profits following the landmark deal reached by OPEC members, while investors shifted away from gold amid stronger signals the Federal Reserve would increase interest rates during their December meeting.

In a landmark referendum, Italy has rejected constitutional reform that would have shifted power from the Senate to the Lower House. The result has effectively ended the leadership of Prime Minister Matteo Renzi, who has already tendered his resignation. Although ETFs tracking Italian equities have remained relatively calm, the outcome is expected to weigh heavily on stocks as the country tries to deal with a looming crisis in its financial sector. Volatility is also expected to remain high across eurozone equity ETFs as investors attempt to discern the extent to which the result will impact the broader monetary union.

By Nick Leung, Research Analyst at WisdomTree:

“Donald Trump’s surprise victory in the US Presidential election caught many ETF investors out, as risk assets surprised to the upside and safe havens routed in the aftermath. WisdomTree’s Boost range of short and leveraged exchange traded notes has revealed that investors trying to protect themselves against an expected post-Trump sell-off actually missed out on further gains in US equities, which now sit at fresh record highs following upward moves of 3.0%.”

VanEck Investments has continued its expansion into Europe by registering its suite of UCITS exchange-traded funds in Italy and Austria. Going forward, Italian and Austrian investors will have access to all fund information, research, investment themes, and other VanEck services. VanEck’s suite of UCITS ETFs include two gold miners ETFs and a US equity ETF which tracks attractively priced companies with sustainable competitive advantages, also known as ‘economic moats’.