Commodity ETF Fund Flows: Energy Mixed, Silver And Natural Gas Lose
It was a bumpy and indecisive ride for commodities last week.
Hard asset investors were all ears as Janet Yellen went before Congress Wednesday to testify on the state of the US economy. The Federal Reserve Chairwoman said inflation was low while unemployment was still elevated.
What’s more, she warned geo-political issues and housing presented downside risks to the US economy.
Thanks to Ms. Yellen’s comments, commodity investors made some interesting moves with their portfolios. Here’s where they placed, and pulled, the most capital for the week of May 8th.
Leading Capital Inflows:
Energy saw the biggest capital inflows last week as the Energy Select SPDR (XLE) grew assets under management (AUM) by $145 million. As I’ve mentioned in a previous article, energy stocks have been a hot spot since early April. And given last week’s action, we may see further gains for this sector.
Next best was the iShares S&P/GSCI Commodity Index Fund (GSG), which saw AUM inflows of $102 million. As you may know, GSG is a broad based commodity-tracking fund. It supplies convenient exposure to energy, metals, agriculture, and livestock markets.
The third best commodity based ETF performer was the Alerian MLP (AMLP) with capital additions of $78 million.
As you may know, AMLP holds a basket of master limited partnership (MLP) companies, all of which provide hefty distribution payments to investors. The vast majority of companies held in AMLP are oil and gas pipeline operators. As of Friday, the AMLP paid a 6.2% quarterly dividend.
Rounding out the five top commodity ETF capital gainers last week was the iShares US Energy (IYE) and the Powershares DB Commodity Tracking (DBC). IYE gained $32 million in assets while DBC added $31 million.
Clearly investors still see upside potential for energy, as well as commodities in general.
But here’s where it gets interesting…
Leading Capital Outflows:
The SPDR Oil & Gas Exploration & Production (XOP) led capital outflows with a loss of $81 million. At first sight, investors appear confused as to the future direction in energy since they piled into the aforementioned XLE an IYE.
However, upon closer scrutiny, you’ll find XOP is primarily composed of small- and mid-cap oil and gas producers like Goodrich Petroleum (GDP), Halcon Resources (HK), and Penn Virginia (PVA). On the other hand, XLE holds large and mega-cap energy companies like Exxon Mobil (XOM), Chevron (CVX), and Conoco Philips (COP).
If anything, investors are likely taking profits on XOP’s substantial April rally and moving capital into safer large-cap energy investments.
But wait there’s more…
The US Oil Fund (USO) suffered a capital outflow of $47 million. As you’re likely aware, USO is a widely traded crude oil tracking ETF. The big outflow likely reflects investor uncertainty over the Ukraine situation.
Silver was all over the map last week as investors digested Yellen’s testimony. As a result, it’s not that surprising to learn the iShares Silver Trust (SLV) lost $37 million in AUM.
Rounding out the top capital redemptions last week were the Velocity Shares 3X Inverse Natural Gas ETN (DGAZ) and the US Natural Gas Fund (UNG). DGAZ lost $19 million in assets while UNG dumped $15 million. The outflows in natural gas ETFs make perfect sense since the EIA reported large inventory injections last Thursday.
Stay tuned to Commodity Trading Research for continued coverage of commodity ETF outflow/inflow data!
Until Next Time,
Justin Bennett
Category: Commodity ETFs
