ETF Gold Run Comes to an End

February 8, 2013 at 07:39


Gold ETPs saw $1.2bn in net outflows in January after total net inflows of $12bn over the previous five-months, according to a BlackRock ETP landscape report yesterday. The figure compares with net inflows of $1.2bn in January 2012.

Mark Johnson, head of UK sales for iShares at BlackRock, said: “We have seen a return of confidence since the new year bolstered by improved news flow from the US, China and Japan. Risk appetite has increased and investors have rotated away from more defensive plays, such as gold, towards equities and, in particular, opportunities in emerging markets.”

Meanwhile, consultancy firm ETFGI said in a report on Wednesday that exchange-traded funds and ETPs providing exposure to precious metals saw net outflows of $1.4bn in January. Meanwhile commodity ETFs and ETPs lost out to equities with net outflows of $411m last month.

The report showed investors poured $37.3bn of net new assets into ETPs globally in January, with $35bn invested in equity ETPs, taking total assets globally to $2.05 trillion at the end of the month and setting a new record for the industry.

Deborah Fuhr, managing partner at ETFGI, said: “There has been a real shift into equities seen in January, which by its very nature moves investment away from commodities. Gold is seen as a safe haven when the economy is uncertain and the outflows we’ve seen reflect a renewed faith in things picking up again.

“But the challenge we have is that as news breaks, such as the alleged [corruption] Spanish scandal this week, people adjust their allocations, which makes it impossible to forecast how long a shift to equities will be sustained.”

The news comes after a number of ETP providers have listed new gold products in recent months, with London-based ETF Securities launching gold, silver and platinum funds in Hong Kong at the close of last year after investments in gold ETFs rose sharply in the third quarter of 2012.

Commodity ETPs hit a record year-end high of nearly $200bn in global assets for 2012, as investors looked to more tangible assets amid prolonged economic uncertainty.