Total global commodity assets under management fell by $18 billion in June to a 32-month low of $349 billion, as investors fled precious metals, particularly gold exchange traded funds, Barclays Capital said in a research note on Friday.
Total commodity AUM - the amount of money invested in commodity indexes, exchange traded funds and medium-term notes - declined by $63 billion in the second quarter, the biggest quarterly decline in Barclays' records, beating even the $57 billion drop that occurred in the fourth quarter of 2008 at the height of the financial crisis.
The liquidation of precious metals investments, especially gold ETPs, had an outsized influence on the overall picture for commodity investments, BarCap said. "The AUM of precious metals ETPs fell by $62 billion in the second quarter, so, excluding precious metals, all other commodity investments saw a relatively modest $1 billion of withdrawals," it said.
"That does not mean there is no evidence of weakness in other commodity investment sectors at present." BarCap said AUM across other sectors has also fallen. Energy AUM is now at its lowest since December 2008, and agriculture is at its lowest since April 2009.
"In terms of flows, activity remains firmly negative, with net redemption's marking every single month in 2013, making June the sixth straight month of outflows, a trend never seen before," the bank said. The bank said that the energy sector may become the only hope for commodity-linked medium-term notes. "If any sector is likely to see an upturn, it will probably be energy. With deep backwardation and a tense geopolitical situation, the risk/return profile in oil is more attractive than in other commodity sectors," BarCap said.
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