Investors Are Dipping Their Toes Into Commodities Again After Months of Outflows

Investors are finally showing signs of losing their antipathy toward commodities.

Twenty of the world’s largest broad-based commodity exchange traded funds attracted net cash inflows over the past two months, the first back-to-back additions since early 2022, according to data compiled by Bloomberg.

By the standards of recent history, the inflows have been relatively light. Collectively they added almost $1 billion. To put that in context, the same 20 funds shed a net $8 billion over the preceding five quarters.

The International Monetary Fund last month predicted that the global economy would expand at a slightly faster pace than it had previously forecast, with the US and the UK in particular doing better. At the same time, traders are wagering that the Federal Reserve is nearing the peak of one of the most aggressive cycles of monetary tightening in a generation, heightening the focus on tighter markets for everything from commodities from oil, to natural gas, to grains.

“People were thinking deep recession,” said Kathy Kriskey, product strategist for commodities and alternatives ETFs at Invesco, which has assets of more than $7 billion in two cross-commodity products. “But now you see people backing off from that story, and that’s what’s getting people slightly more optimistic and toe-in-the-water back into commodities.”

Kriskey said she’s fielding a growing number of calls from clients about investing in commodities again.