Commods assets dip on "price falls, not outflows"

NEW YORK Tue Jan 27, 2009 12:07am GMT

NEW YORK Jan 26 (Reuters) - Assets under management (AUM) in commodities fell 22 percent in 2008 but the plunge was due more to the slump in oil, metals and grain prices than outflow of funds, Barclays Capital said on Monday.

Commodity investment products saw an estimated inflow of $15 billion last year, up 4 percent from 2007, BarCap said.

The London-based investment bank said the AUM for commodities at the close of 2008 was $154 billion, down from a high of $270 billion in the second quarter.

It did not give an AUM estimate for the end of 2007. But the 22 percent drop it cited for last year suggested the previous year's close at around $197 billion.

BarCap, one of the biggest cheerleaders in commodities in recent years, dwelt instead on last year's inflows as the bigger story.

"This reaffirms the fact that price falls were the primary reason for the fall in AUM and not widespread outflows," BarCap said in a report.

The bulk of the inflows came from demand for commodity exchange-traded products, or ETPs, which BarCap said was rather strong in the first half of the year from retail and institutional investors.

Passive exposure to long-only commodity indexes was another major contributor, it said.

Despite heavy liquidation in indexes through the third and fourth quarters, inflows to ETPs continued, it said.

For full BarCap report, click here%20flows%20Q4%2008%2026%20Jan%2009.pdf (Reporting by Barani Krishnan; Editing by Christian Wiessner)

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