ETF Securities’ gold equity fund Rises 90% as investors seek hard asset and value equity plays through collateralised investment vehicles…
- ETF Securities’ platform of commodity-related equity ETFs shows strong returns as investors build positions in hard assets and commodity-related equities
- Gold and Agri-business equities outperform market – ETFS Russell Global Gold Fund (AUCO) up 90% & ETFS S-Net ITG Global Agri Business Fund (AGRI) up 18% since end of 2008
- ETF Securities’ lists Europe’s first Shipping ETF (SHIP) as Baltic Dry Index rises a record 15% yesterday
- ETF Securities’ equity ETF platform continues to expand in Europe with new listings on Deutsche Borse and Borsa Italiana
ETF Securities has seen strong outperformance in a number of recently listed commodity-themed equity ETFs. These ETFs are UCITS III equity funds tracking companies in a range of global commodity sectors including coal, shipping and agri-business. The new ETF platform is a world first for exposure to such a wide range of thematic global commodity sectors in the one ETF platform, and as a result, has taken in approximately $30 million since its recent launch. ETF Securities is the global pioneer in commodities with nearly $9bn invested in commodities directly through ETCs.
The ETFS Russell Global Gold Fund (AUCO) which tracks global gold mining companies has been the best performing ETF, rising by 90% since the 28 October 2008. This compares to a 22% rise in the gold price over the same period. Gold companies have benefitted from investors’ increasingly bullish view on the gold price, with gold companies providing leverage on further gold price gains. Even after recent increases, global gold companies are still trading at a discount to their levels versus the gold price.
Agriculture-related equities have also performed strongly with the ETFS S-Net ITG Global Agri Business Fund (AGRI) – which tracks the returns of globally listed companies involved in agriculture – up 18% since 5 December 2008 (a 110% annualized return). Investors appear to be attracted by agriculture’s defensive nature (agricultural prices tend to have a low correlation to the business cycle) and the agriculture sector’s relatively strong supply-demand fundamentals.
Yesterday, the Baltic Dry Index rose a record 15% in one day. It has been reported that the number of idle capesize ships fell to almost zero after being around 25% a couple of months ago. The ETFS Russell Global Shipping Fund (SHIP) shows a high positive correlation to the Baltic Dry Index. However the Baltic Dry Index is up 70% over the past month in contrast to SHIP which is down 10% as a result of the recent pressure on global equities.
Interestingly, a number of other ETFs exposed to growth themes also performed well last week, indicating that investors may see value in current valuations. The ETFS Russell Global Coal Fund (COAL) was up over 7% last week while the ETFS Russell Global Steel Large Cap Fund (STLL) rose 6.5%.
ETFs tracking the broad US equity market, the ETFS Russell 1000 Fund (RONE) and ETFS Russell 2000 Fund (RTWO) also saw a rebound last week, rising by 1.1% and 0.7% respectively. Historically the Russell 2000® – which provides exposure to US small cap equities – has seen the strongest returns versus major US equity markets indices when the business cycle turns up while the Russell 1000® – which tracks 90% of US large cap equities – tends to relatively outperform during downturns. ETF Securities is the first European issuer to list ETFs on both the Russell 1000® and Russell 2000® indices – being the two most tracked US equity indices.
Exchange Traded Funds (ETFs) are currently seeing renewed interest as investors seek protection through their investments from credit related risks. An ETF’s fund structure ensures that assets are segregated from the issuer, unlike many structured products which are usually unsecured debt from the issuer. ETFs provide investors with a liquid, transparent, collateralised and continuously traded investment solution. As a result, investors are now favoring ETFs when looking to get exposure to a particular market or sector that would otherwise be difficult or costly to access – ETF assets and ETF trading volumes are rising contrary to other investment products. ETF Securities’ innovative ETF fund structures are being generally accepted as a great improvement on the legacy single bank Issuer models that exist to date in Europe.
ETF Securities has now expanded the reach of its platform of equity index tracking Exchange Traded Funds (ETF) on European Exchanges with new listings on the Deutsche Borse and the Borsa Italiana, following the existing listings on the Irish Stock Exchange, the London Stock Exchange and NYSE-Euronext in 2008. The ETFs are now listed on 5 major European stock exchanges in dedicated ETF trading segments. The ETFs are traded in three currencies (USD, Euros and Sterling).
Commenting, Nicholas Brooks, Head of Research and Investment Strategy, at ETF Securities, said:
“Commodity-related equity ETFs have seen extremely strong performance recently as investors have increasingly focused on longer term fundamentals supporting commodity prices after extreme drops in the share prices of mining companies. The ETFS Russell Global Gold Fund (AUCO), which tracks global gold mining companies, has been the best performing ETF, rising 90% since the 28 October 2008. Even at current levels, it is trading at a discount relative to its historic relationship with the gold price.
“Shipping equities may also provide good value following their very severe drop over the past eight months. The ETFS Russell Global Shipping Fund (SHIP), which historically has had a high correlation to the Baltic Dry index, is down 10% over the past month while the Baltic Dry index has risen 70% over the same period. Yesterday alone the Baltic Dry index rose 15%, indicating that if this historical relationship holds there may be scope for a rebound in SHIP.”
Source:ETFWorld.co.uk – ETFSecurities
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