Sat, Oct 1, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Opalesque Futures Intelligence

Index Tracker: Commodity Index Investing Data: Dramatic Growth in Gold and Agriculturals.

Friday, April 29, 2011

Commodity Index Growth
By Chidem Kurdas

There has been dramatic growth in index-related commodity investments over the past two years. In particular, investments in gold and certain agricultural commodities like corn have expanded substantially, as the table below shows.

The Commodity Futures Trading Commission collects information on index investing in commodity markets. For this purpose, the investors include index funds, swap dealers, pension funds, hedge funds and mutual funds. Exchange-traded funds and exchange traded notes are  part of the index activity.

These participants use both direct investments in futures markets and indirect investments through over-the-counter swap agreements with financial firms. The CFTC obtains information about both activities. For OTC agreements, the Commission uses "special call" requests for details of firms' market positions in physical commodity futures.

The data below is the notional value of futures contracts for all US markets with more than $0.5 billion of reported net notional value of index investment at the end of any one month.

Index Investment Growth

 Notional Value of Futures Contracts, Net billions of $

  Feb. 28, '11 Dec.31, '10 Dec.31. '09 Dec. 31, ‘08
Total, US and Non-US  232.7 211.1 159.9 82.2
Selected US Futures: 47.3 41.7  36.4 20.1
WT1 Crude Oil        
Gold  16.7 14.9 8.4 6.1
Natural Gas 16.5 14.6 14.7 7.1
Corn 15.6 13.8 6.9 5.0

SOURCE: Commodity Futures Trading Commission, various reports

Gold  is an outstanding example. Index-related gold futures activity - as defined above - fell from 2007 to 2008, reflecting the unusual circumstances at the time. By the end of 2009, conditions were more normal. From then to the time of the latest data release  at the end of February 2011, the notional value of gold contracts approximately doubled.

This year gold futures have been the largest sector  after crude oil, whereas in the past other commodities like natural gas drew far more activity than gold.

For a discussion of possible adverse effects from the inflow of capital into futures markets, see this issue's Inside Talk with Mack Frankfurter.



 
This article was published in Opalesque Futures Intelligence.
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: BlackRock taps Artivest for alternative investment platform partnership[more]

    Bailey McCann, Opalesque New York: BlackRock will be working with New York-based Artivest to provide a platform for broader distribution of BlackRock alternatives funds. Artivest is a technology-driven alternative investment platform that also offers brokerage services. BlackRock has approximatel

  2. Eden Rock buys Gottex stake in ERG Asset Management[more]

    Matthias Knab, Opalesque: Eden Rock Group announced the purchase of Gottex’s stake in ERG Asset Management and so the firm is now wholly owned by Eden Rock. The two firms established the joint venture in 2011 to focus on providing cost effective solutions to funds holding illiquid investments, as

  3. "Hedge fund industry needs to shrink"[more]

    Komfie Manalo, Opalesque Asia: Writing for CNBC, Josh Brown, creator of The Reformed Broker blog and financial advisor for Ritholtz We

  4. Strategy - Voyager Management wants to invest in smaller hedge funds[more]

    From Valuewalk.com: Voyager Management, a $475 million fund of funds, is looking to downsize the hedge fund’s in which they invest, looking for smaller funds with assets under management that enable the fund to be nimble. The fund is looking for noncorrelation and will consider long / short equity

  5. Asia - Quant hedge funds are China's hot new export, Europe banks return to Korean brokerage market; target debt, alternative products[more]

    Quant hedge funds are China's hot new export From Bloomberg.com: Add China’s quant shops to the list of hedge funds branching out across Asian markets. Quantitative money managers from the world’s second-largest economy are opening offshore funds at a never-before-seen pace, according to