Commodities rout continues as investors pull $2bn in a week

Commodities funds have been hit by a second successive week of record outflows.


Some $2.3bn was yanked from commodities funds in the week to May 11, with gold and precious metals redemptions again at the fore, according to EPFR Global. But energy sector funds saw sentiment improve, and posted modest inflows on the week, the data firm suggesting investors were focused on tighter supplies rather than softer demand.

On a broader basis, the seven-day period was notable for the first collective outflow from equity funds since mid-March. Bond funds, by contrast, saw their second largest week of inflows year-to-date.

With EM equity fund inflows roughly flat, the main area of debate was developed market equity funds: retail investors pulled money out of four of the five major groups – US, global, Europe and Japan equity funds – with only Pacific equity funds seeing retail commitments.

Institutional investors disagreed with those lines of thinking, however, pulling money from Pacific equity funds but committing new money to the other four sub-sectors.

One industry sector that is beginning to attract attention is healthcare and biotech funds, according to EPFR, which noted a second successive week of historically high inflows. "This fund group has lagged for some time despite good performance. I think we’re beginning to see retail money chase that performance," said EPFR Global director of research Cameron Brandt.

The firm added that an analysis of short interest in ETFs found that sub-sectors of the energy, financials and consumer goods sectors were seeing the highest levels of activity on the week, with short interest in some consumer discretionary ETFs "having doubled since the start of the year".


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