Industry Updates

Investors seek haven in short & leveraged commodities

George Geddes

a lifeguard stand in the water

Following the major selloffs and market volatility of Q4, alternative and commodity short and leveraged ETPs still saw positive net flows for January, according to the latest Short & Leveraged (S&L) ETP Flows report by WisdomTree. The likes of equity and currency S&L products saw outflows of nearly $2bn and $365m, respectively.

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Source: WisdomTree

Global Assets Under Management (AUM) for all S&L ETFs/ETPs is up from $74.2bn in 2018 to $76.3bn in 2019, despite having 50 less products available in the market. Commodity's global S&L AUM sat at $6.2bn at the end of January, second only to equity which is significantly further ahead with over $62bn in AUM. More assets are invested in commodity S&L ETPs than debt which has only $5.4bn, according to the report.

Amid the equity market's struggles, gold it appears was the go-to safe haven as it is often viewed as a defensive hedge, says WisdomTree. In fact, investors have become increasingly bullish in the commodity since the first half of 2017. By the end of January 2019, the average investor leverage on gold ETPs reached 1.97x, an all time high.

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Source: WisdomTree

Investors might be getting bullish towards gold but there remains one commodity receiving majority of the attention in the asset class: natural gas. Gold S&L ETPs received $110m in asset flows for the month of January but was heavily overshadowed by natural gases which saw $249m in inflows.

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Source: WisdomTree

AUM for Natural Gas S&L ETPs have now overtaken gold following January's asset flows. Natural gas now has $1.22bn in AUM, just ahead of gold with $1.15bn.


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