Investors Scoop Up Explorers As Crude Falls?
Last week was a mixed bag as far as commodity ETF inflow/outflow data goes. Major commodities like oil and gold fell in price, but at the same time, investors piled into funds holding the producers of those same assets.
Thanks to this interesting trend, commodity exchange traded products (ETPs) saw net inflows of $59 million for the week of November 15th – not bad considering the relative weakness in commodities.
Here’s a closer look at where investors are stashing their cash…
Leading Outflows:
The US Oil Fund (USO) saw the biggest outflows last week. In fact, assets under management (aum) at the crude tracking ETF fell by $139 million. Of course, this downswing is due to the hefty drop in oil prices over the past few weeks. In case you’re unaware, WTI crude is currently down nearly $6 a barrel from the October 28th high of $98.82.
Second in line is the SPDR Gold Trust (GLD)…
The widely traded ETF lost just over $98 million in aum last week as gold fell to multi-week lows near $1,260 an ounce. Of course, the yellow metal’s recent weakness was mimicked by silver. As a result, the iShares Silver Trust (SLV) shed nearly $64 million in aum.
Rounding out the top five ETF losers for the week were the Market Vectors Oil Services (OIH) and the US Natural Gas Fund (UNG) will outflows of $35 million and $30 million respectively.
As you can see, it was a tough week for the major commodity tracking ETFs.
But now for the good news…
Leading Inflows:
While the price of oil and gold fell, investors were quick to add producers of those same commodities. As a matter of fact, the Energy Select SPDR (XLE) saw aum grow by nearly $95 million last week. That’s an impressive jump considering the weakness in crude prices.
As you may know, XLE holds major oil companies like Exxon Mobil (XOM), Chevron (CVX), and Conoco Phillips (COP).
But XLE wasn’t the only energy focused ETF seeing big capital additions last week…
The SPDR Oil and Gas Exploration and Production (XOP) saw $82 million in capital inflows. Much like XLE, XOP holds companies in the business of producing oil and natural gas. However, XOP’s focus is on smaller capitalization companies like Magnum Hunter Resources (MHR), Northern Oil & Gas (NOG), and Carrizo Oil & Gas (CRZO).
Rounding out the leading inflow category is the Direxion Daily Gold Miners Bull 3X (NUGT) and the SPDR Metals and Mining (XME). These mining based ETF saw capital gains of $69 million and $43 million respectively.
What can we make of this data?
Clearly, investors are jumping at the opportunity to add commodity-producing companies to their portfolios while hard asset prices are in pullback mode. Once commodity prices return to a strong uptrend, these astute investors will be sitting pretty.
So there you have it…
Even though gold and oil were lower last week, investors were quick to add producers to their portfolios. Stay tuned to Commodity Trading Research for continued coverage of the hard asset markets!
Until Next Time,
Justin Bennett
Category: Commodity ETFs
