* November net inflow at $320 mln versus October's $2.4 bln
* Gold has gross inflow of over $1 bln, mostly in SPDR
* PIMCO fund for institutional investors bleeds most money
By Barani Krishnan
Dec 19 The money that flowed into U.S. commodity
products and funds in November was the smallest in 1-1/2 years
and little improvement is expected before the year end as
investors worry about a fiscal crisis, according to fund tracker
For a fourth straight month, Lipper's fund flow data, which
was released on Wednesday, showed that gold products and gold
funds attracted the most money in commodities -- over $1 billion
-- as investors saw the precious metal as a quickly saleable
asset to cover losses elsewhere.
SPDR Gold Shares, the world's largest exchange-traded
fund (ETF) for bullion, dominated the inflow into gold.
General commodity funds, that served big investors such as
pension funds, bled money. U.S. bond manager Pimco's commodity
fund for institutional investors had the largest
Lipper data showed a net inflow of just over $320 million in
November for the 230-odd U.S. regulated commodity products and
funds which it tracked -- down from $2.4 billion in October.
It was the smallest monthly inflow for the group since the
net $21 million achieved in June 2011. It was also a fraction of
the near $3 billion seen in November 2011, when a spike in
gold-related investments again boosted money coming into
LITTLE ROOM FOR COMMODITY BULLS
Despite the staggering drop in November inflows, the
19-commodity Thomson Reuters-Jefferies CRB index
settled the month up 1 percent, rising for the first time since
September. The gains were largely due to a pick up in oil and
copper prices from oversold conditions, traders said.
"There was little room really for commodity bulls to build
meaningful positions last month," said Matthew Lemieux, a
research analyst who helps compile the flow data for Lipper, a
Thomson Reuters company.
"First, markets were riddled with uncertainty ahead of the
U.S. presidential elections in early November; then the fiscal
crisis came into focus," Lemieux said.
President Barack Obama, who won a second term in the
elections, has been working to reach a deal with his Republican
rivals to avert the so-called "fiscal cliff" -- which threatens
the economy with crippling tax hikes and spending cuts unless an
agreement is reached by Dec. 31.
Lemieux said Lipper's preliminary data for December showed
another subdued month for commodities.
"We're seeing lower trading volumes across markets. For
commodities specifically, I think investors are just taking a
pause for the most part, waiting for the year to close out to
see what's going to happen with policy-makers in Washington."
Progress in talks in avoiding a fiscal crisis appeared to
stall on Wednesday as Obama accused Republicans of digging in
their heels due to a personal grudge against him, while a
Republican leader called the president "irrational."
GOLD INFLOWS RISE DESPITE PRICE FALLS
SPDR Gold Shares dominated Lipper's commodity inflows data
for a fourth straight month, taking in almost $718 million,
after the $1.4 billion in October, $1.74 billion in September
and nearly $2 billion in August.
iShares Gold Trust had the second largest inflow,
attracted nearly $352 million, versus $500 million in October
and $610 million in September.
Despite the money piling into gold, the precious metal's
price has fallen from this year's peaks as investors either took
profits or liquidated to cover losses in other investments.
"Typically when you have significant down moves in other
asset classes, gold will get sold off too because it can raise
cash quickly," said Frank McGhee, chief precious metal trader at
Integrated Brokerage Services in Chicago.
The spot price of gold, hovering just below $1,670 an
ounce on Wednesday, is down 13 percent from a September high of
$1,920. For the year, though, it is up nearly 7 percent.
Pimco's "Real Return Strategy Fund" for institutional
investors accounted for the largest outflow in November -- just
over $500 million.
Total net asset value for all the 230-odd U.S. commodity
products and funds tracked by Lipper rose slightly to about
$174.5 billion from October's level of around $172 billion.