March 19, 2013 / 9:00 PM / 4 years ago

Broad commodity ETFs get inflows as investors flee gold funds

* Broader funds see $1.1 bln Feb inflow, new upside in March

* SPDR gold sees $3.8 bln outflow in Feb, more lost in March

* PIMCO, Fidelity commods funds have most inflows

By Barani Krishnan

March 19 (Reuters) - Commodity exchange-traded fund investors have put money into funds with wider commodities exposure after pulling record amounts from bullion-specific funds as the price of gold tumbled, data from funds tracker Lipper showed.

U.S.-based ETFs tagged as "General Commodities Funds" attracted more than $1 billion in February, their highest in nearly a year after outflows from September though December, the data showed. They had inflows of a little more than $1 billion in January and were headed for another positive month in March.

In contrast, funds dedicated to precious metals saw an exit of nearly $4 billion in February after outflows of $765 million the previous month. The February outflow was the most recorded by Lipper since the Thomson Reuters company began tracking investment activity among commodity ETFs in Nov. 2004.

Almost all of that outflow was from the SPDR Gold Trust , the world's largest gold-backed exchange-traded fund.

Lipper data through the first two weeks of March indicated a further loss of more than $1 billion from precious metals ETFs.

"If you find gold isn't your place to be now and don't want to move all your money to equities and other high-yielding products, then the more-diversified and actively-managed General Commodities Funds might be for you," said Lipper analyst Matt Lemieux, who compiled the data.

But Lemieux noted that broader commodity funds also had a history of volatile flows. He said investor interest in them will depend on how energy, metals and crop prices fare. "We're going to have to see better precedent for the broader commodity markets because they've been struggling for some time now."

PIMCO LEADS INFLOWS, SPDR GOLD OUTFLOWS

For a second month in a row, giant bonds investor PIMCO and mutual funds firm Fidelity led inflows in a monthly table of some 220 U.S.-based commodity ETFs, mutual funds and products issued by Lipper.

PIMCO's Commodities PLUS Strategy Fund drew nearly $264 million in February, the most of the lot. The Fidelity Series Commodity Strategy Fund came in second, taking in almost $210 million.

The two belong to Lipper's Commodities General Funds group, which took in $1.1 billion last month. That was the highest amount the group had attracted since the $1.9 billion it took in March 2012.

The group is dominating inflows again this month, gaining $223 million between March 1 and 13.

In Lipper's Precious Metals Funds group, SPDR Gold had the largest outflow for February with $3.8 billion. BlackRock's iShares ETF for silver offset some of the losses by taking in nearly $260 million.

Precious metals funds have extended their losses this month, with an exodus of nearly $1.3 billion from March 1-13.

Last year, some 70 percent of investments that flowed into U.S. commodity ETFs went into SPDR and another gold fund run by iShares. SPDR, also known as Spyder Gold, had a net inflow of $5.3 billion and the iShares Gold ETF $2.4 billion.

The build-up in the two ETFs was based on expectations, later confirmed, that the U.S. Federal Reserve would launch a third round of quantitative easing to boost the economy. Interest in gold investment products also swelled as bullion prices rallied for a 12th straight year.

FAR FROM EVEN

The trend changed after signs of stronger economic recovery in the United States, Europe and China made investors more open to risk since this year began. Some of the money investors had put into gold as a hedge against troubled times began flowing toward oil, base metals and crops. U.S. stocks also benefited, as the Dow Jones industrial average hit record highs.

But gains in broader commodities have been far from even. The 19-commodity Thomson Reuters-Jefferies CRB index rose 3 percent in January, lost nearly 4 percent in February and is flat so far this month.

The spot price of gold slipped 0.7 percent in January and tumbled another 5 percent in February, but has gained 2 percent this month. Spot gold traded at just above $1,610 an ounce on Tuesday as some investors sought a safe haven after a troubled bank bailout attempt for Cyprus raised worries over euro zone stability.

Still, gold remains well below the January peak of nearly $1,700.

"If I'm into ETFs, I'll still hold away from gold," said Adam Sarhan at New York's Sarhan Capital. "Everytime gold has tried to rally since December, it has failed. The Cyprus drama is still a small piece in the game for now."

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