Buyers are flooding commodity exchange-traded funds with money on indicators that shortages for vitality, metals and grains will spark hefty returns.
Commodity ETFs had been injected with greater than $4.5 billion final week, an influx that will usually be seen over the course of a month.
In a rarity, the cash going into the funds topped flows into fairness and bond ETFs, which pulled in $3.8 billion and $2.3 billion, respectively.
The sudden inflow of money comes as red-hot inflation hampers different belongings. Commodities are usually seen as a hedge towards rising shopper prices. Russia’s invasion of Ukraine has additionally exacerbated fears of shortages for uncooked supplies at a time when inventories throughout commodity markets had been already tight. The Bloomberg Commodity Spot Index touched a contemporary file excessive final week.
Agriculture ETFs racked up large investments, with the belongings seeing a rise of about $468 million. Wheat costs are hovering, and futures on Monday settled at a file.
The Invesco DB Agriculture Fund, which incorporates a wide range of agricultural commodities akin to corn and soybeans, acquired about $270 million on Friday, the biggest-ever day by day influx for the ETF because it was launched in 2007.
Curiosity in agriculture is so fervent that Teucrium Buying and selling on Monday mentioned it suspended creation of shares in its wheat fund after promoting all out there shares, in line with a securities submitting.
Commodity costs from grains to grease to metals have been on the rise over the previous 12 months as suppliers discovered it troublesome to maintain up with the demand growth that got here as economies emerged from the pandemic. Then, Russia’s invasion of Ukraine catapulted markets a lot greater as exports from the area dried up.
Russia is a powerhouse provider of vitality, metals and crops, whereas Ukraine is a high grain exporter.
This story has been printed from a wire company feed with out modifications to the textual content. Solely the headline has been modified.
Supply: Live Mint