US commodity fund inflows slip to $1.3b in April-Lipper

Thu May 26, 2011 8:20pm BST

Quotes

   

* In-flows to commodity ETFs, funds eases to $1.3 bln

* Monthly flows shrink from over $4 bln in Feb and March

* Total asset value at $175 bln, up $5 bln from month ago

* History of fund flows: r.reuters.com/qem79r

By Barani Krishnan

NEW YORK, May 26 (Reuters) - Monthly inflows to commodity-based products and mutual funds dipped to just $1.3 billion in April, just before commodities suffered their biggest correction since 2008, Lipper data showed on Thursday.

Net inflows to U.S.-regulated "commodity products" slid from $4.1 billion in March as investors exited some energy and broad index funds and focused on precious metals amid a rally in gold, according to the data tracking funds investing in physical commodities or derivatives, not corporate securities.

The Reuters-Jefferies CRB index .CRB, a global benchmark for commodities, rose about 3.0 percent in April, extending gains in three previous months. For May, the index is headed for a loss about 7.0 percent as commodities sold off after a rebound in the dollar and concerns on whether economic growth was enough to support oil prices at above $100 a barrel.

According to April's data, SPDR Gold Shares (GLD) attracted the largest inflow of nearly $900 million, taking net assets to $60.7 billion, as gold prices rallied their most since November 2009. iShares Gold Trust (IAU) accounted for the second largest inflow, with just over $448 million.

Underlying shares of SPDR, the largest commodity fund tracked by Lipper, rose about 9 percent last month, almost as much the spot price of bullion, Thomson Reuters data showed. XAU=

The U.S. Oil Fund (USO) witnessed the largest outflow in April, reversing almost a third of March's inflows.

This was despite crude prices CLc1 LCOc1 being strong through April, extending first quarter gains made from crises in Middle East and North African oil producing countries.

The biggest commodity mutual fund operator, PIMCO, saw the second largest outflow on its CommodityRealReturn Strategy Fund for institutional investors. The fund is benchmarked against the Dow Jones-UBS Commodity Index Total Return index .DJBUSTR.

In separate data, Barclays Capital said a much broader range of global commodity products that it tracks -- including index-linked swaps, short-term notes and other funds -- saw inflows of $5.8 billion in April, taking total investments to a new all-time high of $451 billion.[ID:nLDE74P21N]

Notwithstanding the latest decline in inflows, total net assets in the funds tracked by Lipper rose to about $176 billion from around $163 billion in March.

Lipper's data does not include fund holdings of over-the-counter indices or direct investment in futures or physical commodities, or hedge funds. Lipper's historical data includes only funds that are currently in operation.

The rising flow of investor capital into commodities earlier this year -- aided by the advent of mutual and exchange-traded funds that allow institutions to avoid the complex futures markets and invest as they would into stocks or bonds -- reopened the debate about whether speculators were responsible for artificially inflating prices.

While numerous studies have sought to disprove any causal link, most analysts agree that multi-billion-dollar allocation shifts into the relatively smaller, less-liquid commodity markets can have a short-term impact on prices.

(Editing by Jonathan Leff)

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