Commodity investor AUM on the rise - RBC

Investing.com - Total commodity investor assets under management continued to rise through April and May, according to analysis from RBC, suggesting that this turn in momentum should be one to watch.

Net notional inflows of $6.7 billion and $5.7 billion in April and May, respectively, were mostly driven by metals on a price basis, with mixed to neutral underlying flows over the two-month period, the bank said.

Total assets under management (AUM) now stand at $608.4 billion, higher month-on-month but still not enough to pull the year-to date average for 2024 above the 2023 full year average. 

“In 2024, we think AUM could stabilize further, especially if precious metals flows turn sustainably positive,” RBC said.

The key appears to be in the metals sector,  with around 86% of precious metals AUM in the bank’s data backed by gold. Thus, gold’s fortune often dictates overall notional moves in AUM in this sector. 

For most of the past year, underlying gold holdings had been on a secular decline. Our best theory was that investors were largely trying to hold the notional value of their gold holdings flat, but as prices rallied to new highs, this necessitated selling. 

“While this is a departure from the longer running relationship between price and flows in the gold space, the mostly range-bound (albeit quite high) pricing in May saw outflows slow and potentially bottom, and with prices more challenged at the bottom of May’s range thus far in June, we have seen a slight uptick in gold holdings,” RBC said, in a note dated June 13.

“If this holds, it is quite supportive to AUM data in the space and is something to watch.”