Skip to main content

Market Overview

Energy Commodity Exposure Is At An All-Time Low: How To Play It


According to a recent Flow of Funds report issued by Credit Suisse, energy commodity exposure is at all-time lows, at -22 percent. Holdings in this asset class are at an all-time low.

As per the firm's data, over the last week, U.S.-listed Exchange Traded Products (ETPs) saw net inflows of more than $3.5 billion, with domestic equity ETPs capturing more than $1.2 billion. Year-to-date, inflows now surpass $24 billion.

On the other hand, international equity ETP inflows reached $1.7 billion last week. Funds tracking MSCI EAFE witnessed some of the largest creations.

Moreover, the analysts noted, the net inflows took place even in spite of net outflows of $1 billion from Emerging Market ETPs.

Also experiencing outflows were Bond ETPs, which saw net outflows of $500 million, with substantial redemption activity in high yield.

Related Link: If Commodity Prices Don't Recover, These Investors Lose

Finally, in the lending market, it became cheaper to short Deutsche X-Trackers Harvest CSI 300 China A-Shares ETF (NYSE: ASHR), iShares Russell 2000 Index (ETF) (NYSE: IWM), and SPDR Barclays Capital High Yield Bnd ETF (NYSE: JNK).

On the contrary, it became significantly more expensive to borrow iShares JPMorgan USD Emer Mkt Bnd Fd ETF (NYSE: EMB), PowerShares DB US Dollar Index Bullish (NYSE: UUP) and Sector Spdr Trust Sbi (NYSE: XLI).

Where Is The Money Going?

If energy commodity exposure is at all-time lows, where is the money going?

Large-cap and technology funds that saw the strongest inflows last week.

In a recent report, Investec’s Hunter Hillcoat explained why he expects the commodity market to remain "subdued" for "several years to come" with a "modest" recovery only in or after 2018.

Among companies to avoid the analyst named BHP Billiton Limited (ADR) (NYSE: BHP), Rio Tinto plc (ADR) (NYSE: RIO) and Glencore International PLC, St. Helier (OTC: GLCNF), mainly due to the “cheap debt” they have "gorged themselves" with over the past five years.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.


Related Articles (IWM + ASHR)

View Comments and Join the Discussion!

Posted-In: Credit Suisse Hunter HillcoatAnalyst Color Commodities Economics Markets Analyst Ratings ETFs

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at