Commodities substantially outperformed equities over 2008

Commodities substantially outperformed equities over 2008 as equity markets fell precipitously in the wake of …




  the credit crisis. Although down, commodities have generally weathered the financial storm better than their equity counterparts. The DJ All commodities Index remains up 14% and 107% over 5 and 10 year horizons.

The S&P 500 is down 7% and 11% over the last 5 and 10 years respectively.
• Gold has capitalised heavily on increasing risk aversion over 2008, up 37% and 18% in GBP and Euro terms respectively over the 12 months to November 2008. Gold is flat in USD over the same period – despite 13% appreciation in the USD
TWI over the period.

• 2008 was a year of extremes. During the first half of the year strong emerging market demand, supply bottlenecks and rapidly rising investor demand pushed the prices of many commodities to historically high levels. In early July, however, as
the severity of the US slowdown and the ripple effects it was having on global growth became increasingly apparent, the virtuous upward price spiral turned vicious.

• As we move into 2009, safe haven assets remain in vogue and most commodities are being tarred with the same brush as investor de-leveraging causes indiscriminate selling regardless of long-term growth prospects or valuations. One key exception has been a surge of flows into long oil ETCs since early November.

It remains to be seen when this is a temporary trend or heralds a change in investor sentiment. – ETFSecuritie




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