PORTFOLIO Funds Sicav Etf

Profit taking in precious metals continues

Profit taking in precious metals continued with outflow in gold totalling US$113m last week

Profit taking in Precious Metals continued with gold outflows totalling US$113m last week. Following the first round of the French Presidential elections, the worst case in terms of market concerns, a Melenchon/Le Pen second round, was averted. Consequently risk assets rallied and defensive assets sold off, with gold bearing the brunt of this with US$125 of outflows last week. Despite this more bearish position in gold over the week we have seen minor outflows in short gold positions. Silver bucked this trend with inflows of US$8.5m, it remains attractively value relative to gold but in the short-term is vulnerable to a sell-off to as futures positioning highlights alltime-highs in positive sentiment.

Crude ETP inflows as recent oil price weakness seen as a buying opportunity. Recent weakness in the oil prices has been seen as a buying opportunity with inflows of US$62m into long position and outflows of US$3m in short positions. Investor flows into crude remain very volatile as investors remain tactical; we typically see outflows when Brent crude reaches US$55/bbl and inflows when it falls close to US$50/bbl. Year-to-date figures highlight that investors remain broadly constructive on further price gains with inflows totalling US$175m. We continue to see oil range bound: expectations that OPEC could announce another production cut at their 25th May meeting could provide support, however, falling marginal costs in the US tight oil industry and rising oil exports continue to undermine OPEC efforts.

Following the presidential election in France there has been surprisingly bearish activity in the EUR. EUR long positions saw outflows of US$13m while EUR short positions inflows of US$9m, suggesting investors have become more bearish, although this maybe due to the more dovish than expected rhetoric from the ECB in Thursday’s meeting where an announcement of QE tapering was expected following the positive outcome from the French presidential elections. Much of the more negative views on the EUR were against the USD and the Swiss Franc.

We continue to see inflows into agricultural commodities, which we believe is due to bargain hunting given recent price weakness. We saw a 9th straight week of inflows into Cocoa ETP: US$66mn inflows YTD. Coffee also saw strong inflows las week totalling US$8.6m (10% of AUM) and US$26m YTD.


James Butterfill - Head of Research and Investment Strategy - ETF Securities

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