Gold ETPs lose over €1.4bn

Gold exchange-traded products have seen outflows of over €1.4bn since the start of the year, driven by increased equity market confidence, according to Deutsche Bank.

Commodity ETPs have seen an overall decline of 0.4% in overall AUM on the back of precious metal outflows, although assets in European non-precious metal ETCs have grown 20.6% this year.

The dominant weighting of these products - precious metals make up over 70% of the commodity ETP universe - has left the asset class underperforming as a whole, obscuring the success of broad basket, agriculture and energy funds.

In fact, Deutsche Bank's Global Equity Index & ETF Research reveals that away from gold, no other commodity sub segments have experienced outflows in any week of 2011 up to 18 February.

AUM growth of 14.3% in diversified commodity trackers, 9.1% in industrial metals and 7.7% in agriculture this year meanwhile documents a general outperformance of equity ETPs, where assets are up just 7%.

Deutsche Bank's analysts credit events in the food and energy markets for generating this more diversified interest in an asset class traditionally ruled by precious metals.

As well as long-term fundamentals impacting on the supply-side, geopolitical events have put oil and agriculture ETPs back in the spotlight. Energy ETCs received inflows of €106m in the week ending 18 February despite prices falling recently, suggesting that investors see such declines as short-term.

The research also anticipates an imminent rally in the gold market at the prospect of central bank diversification and further US dollar weakness. There is evidence that gold ETCs may already be recovering, having attracted €346m net new assets in the week ending 18 February.