Inflows stood at $275m (£160m), up from $271m (£158m) of inflows in Q1 2014. Assets under management rose just under 1% in commodity ETPs at the end of Q2 2014 to $123.3bn from $122.4bn at the end of Q1 2014.
In February, sales of exchange-traded funds and products reached a record high of $2.44trn (£1.45trn), according to ETFGI.
Trends from one quarter to another showed that the exception in ETP growth were agriculture and livestock commodities, where ETPs registered outflows of $477m. Large outflows were seen in commodities such as sugar, corn, cocoa and coffee, likely due to a combination of profit-taking and expectations of improved growing conditions for a number of key agriculture commodities.
On the other hand, precious metals saw the strongest investor demand with $430m of inflow. The strongest demand in the second quarter was registered in platinum and palladium, with $400m and $410m of inflows respectively.
Gold ETPs saw mixed flows, with US-listed gold ETPs seeing $586m of outflows while Europe and other country listed gold ETPs saw $483m of inflows. This lead to net quarterly outflows of $103m. Most of the divergence in the gold ETP flow trends took place in April.
“With geopolitical risks still high and many risky asset classes trading at stretched valuations, we believe gold ETP demand will continue to improve in H2 2014 as investors look for hedges against possible risk market corrections,” Nicholas Brooks, head of research and investment strategy at ETF Securities, said.
Second-highest inflows were seen in diversified broad commodity ETPs with $172m. The inflows reflect improving sentiment towards commodities as an asset class as China growth has shown signs of picking up and China policy-makers have made clear they are moving into stimulus mode after three years of tightening.
In third place, energy ETPs saw inflows of $135m and most of the flows ($169m) going into oil ETPs. Meanwhile natural gas ETPs saw $21m of outflows as investors took profits on the natural gas price surge earlier in the year.
Industrial metals saw more modest inflows of $15m with nickel seeing the strongest inflows ($38m) as Indonesia’s ban on ore exports drove prices higher.
“Increasing confidence in the US recovery, a positive turn in China growth after three years of slowdown, and expected further easing measures by China’s policy-makers has boosted prices and investor sentiment towards commodities,” Brooks noted.
