Commodities Funds Gain Steam
Firms are launching commodities funds as the sector experiences its first boom period in decades.
Fund firms are joining exchange-traded fund providers in the fray, with launches from Direxion Funds and Morgan Stanley Investment Management. ProFunds has filed for a suite of commodities ETFs it plans to launch in August. So far, 25 commodities ETFs have launched this year, according to Matt Hougan, editor of IndexUniverse.
Commodities funds have experienced $103 million in net flows the past three months and $480 million year-to-date. Investors pulled $1.85 billion from commodities funds in 2007, according to figures from Morningstar. "We have seen a proliferation of these funds. There has been a lot more investor interest and assets flooding into commodities and you see a rush by players to offer a competing product," said Karen Dolan, director of fund analysis at Morningstar.
Direxion Funds last week launched the first long/short commodities fund, the Commodities Trend Strategy Fund, benchmarked to the S&P Commodity Trends Indicator. Direxion has also filed to launch a commodity bear fund, but has no timetable for the launch.
Morgan Stanley launched the Commodities Alpha Fund last month. That fund is benchmarked to the Dow Jones AIG Commodity Index. Morgan Stanley did not return a call for comment.
Commodities have been one of the fastest growing segments of the ETF market this year, and Hougan said he expects that to continue.