Q1 has shown commodity prices rising by 7% while total assets invested in the sector increased to $122.4bn.
Precious metals, agriculture and industrial metals saw the bulk of inflows, led by silver, which benefited as a leveraged play on improved sentiment towards gold.
Silver ETPs saw $354m of net purchases, building on its success of 2013. ETF Securities said $20/oz for the metal appeared to be a good entry point, at less than half its peak in 2011.
Active Q1 as supply/demand forces grip
Platinum ETPs saw strong demand amid worries over industrial action in South Africa, where more than 70% of the world’s supply is sourced, which in turn pushed the price up. The provider suggested that further price gains and inflows seemed likely.
Gold, meanwhile, saw stronger investor demand in February and March as global risk perceptions increase, with inflows of $322m and $536m respectively into gold ETPs. Against large outflows in January however, net outflows on the quarter were $88m.
The upturn in sentiment was driven by several factors – a scaling back of investor bullishness on the growth outlook for the US economy following weak data, upward revision of geopolitical risk in emerging markets and Russia’s takeover of Crimea with ongoing concerns over broader conflict driving up gold demand as investors sought a hedge against further turmoil.
Beyond metals, agriculture saw a rebound in Q1, with $217m of inflows, with the greatest appetite ($182m) for broad diversified agriculture ETPs rather than sector-specific calls. Corn led the way in the individual commodities, taking in $109m.
After a record year of inflows in 2013, coffee-pegged products suffered outflows in Q1 as investors took profits as Arabica prices surged 70%, so shorting is gaining traction.
Natural gas products have also seen profit taking following the Henry Hub price rally off the US cold spell, which rose from around $3.5m/MnBtu in much of the second quarter to $7.98/MnBtu in March. As such, short strategies have grown in favour.
