Commodities: January performance and ETF flows

Industrial metals traded mixed with a second consecutive monthly loss being led by losses in nickel and aluminum, both currently seeing ample supply, while copper managed a small return amid short covering after the demand outlook brightened after the People’s Bank of China, in their latest efforts to prop up the economy, surprised the market by announcing a bigger-than-expected cut in its reserve requirement ratio. Precious metals meanwhile traded lower but with gold showing underlying strength after recording a small loss compared to the adverse strength seen in the dollar.

A great deal of action was also seen in commodities that are not represented in the BCOM Index, most notably sport uranium U308 which continued its month-long rally amid a tightening supply outlook as major miners struggle to keep up with demand. Not least Kazakhstan’s Kazatomprom,the world’s top producer, who have lowered their 2024 production guidance by 9.3 million pounds or 14.2%, siting limited access to sulphuric acid. Other non-BCOM members such as EU TTF gas and platinum also suffered declines, with the latter seeing thediscount to gold hitting a record high above $1100 per ounce. 

How did ETF investors respond to these developments?

The table below show some of the world’s largest and most actively traded commodity ETF’s, their recent performance and not least recent investor flows. There are many ETFs tracking commodities so the list is by no means exhausted and should primarily be used for information and inspiration. 

The first section are UCITS-compliant ETFs and are based on an EU directive that provides a regulatory framework for funds that are managed and based in the EU. A UCITS fund can be marketed to and traded by private investors because it adheres to common risk and fund management standards, designed to shield investors from unsuitable investments. 

The second part of the table shows mostly US listed, and therefore non-UCITS compliant ETFs. It’s among this group we find some of the world’s biggest ETFs in terms of market cap, led by the GLD and IAU, two ETFs that tracks the performance of gold. It is also worth noting that due to changed taxation rules by the US Internal Revenue Service, Saxo no longer offer access to cash trading in PTP securities. We chose to show the PTP registered ETFs given the signal value they can provide, but also the fact that traders understanding the added risks of holding leveraged positions can still trade these as CFD’s.