Analysis & Opinion

* $1 bln outflow for SPDR in Jan, first since July -Lipper

* Data shows more drop for SPDR through early Feb

* Broader commodity funds led by PIMCO, Fidelity up in Jan

By Barani Krishnan

Feb 21 (Reuters) — U.S. ETF investors’ five-month love affair with gold came to an abrupt end in January as they pulled $1 billion from the world’s largest bullion-backed exchange-traded fund to put into other commodity funds, data from funds tracker Lipper showed.

The exodus of money from the SPDR Gold Trust was driven initially by encouraging economic trends that boosted appetite for riskier commodities such as oil and grains. The retreat has continued into February despite uncertainties over global growth.

On Wednesday alone, SPDR’s bullion holdings dropped by nearly 21 tonnes — the most in a day since August 2011 — after a sharp selloff in gold, according to the fund, also known to investors as Spyder Gold.

In terms of investor capital, Lipper data shows Sypder losing a further $112 million through Feb. 13.

While the combined outflow barely made a dent on Spyder’s total value of $72 billion at end-January, it represented a significant shift in mood toward a fund that attracted money almost non-stop in the second half of 2012 as gold rallied.

It looks like people started the year pulling money out of gold to go into other commodity funds, particularly the broader multi-commodity type funds, although that could change as the market evolves, said Matthew Lemieux, a Lipper analyst who compiled the data.

BROADER COMMODITY FUNDS GAIN

Among the 220 U.S.-based commodity ETFs, mutual funds and products tracked by Lipper, those that saw the most inflows in January included funds belonging to mutual funds company Fidelity, bonds investor PIMCO and Deutsche Bank.

The Fidelity Series Commodity Strategy Fund drew $305 million last month, the PIMCO Commodities PLUS Strategy Fund attracted $207 million and PowerShares DB Commodity Index Tracking Fund gained $254 million.

The three belong to the Commodities General Funds group in the Lipper data that took in just over $1 billion. The last time this group attracted this much money was in March 2012.

The Precious Metals Funds group, which includes Spyder, had $765 million in outflows. Spyder itself lost $1.1 billion but some of that was offset by positive flows into other precious metals funds, including those run by BlackRock’s iShares group.

Spyder’s bullion holdings, standing at nearly 1,300 tonnes, are the largest held by any ETF. The gold is worth about $65 billion and is stored in bank vaults. Bullion holdings by iShares Gold amount to nearly 220 tonnes, worth about $11 billion.

Last year, some 70 percent of investments that flowed into U.S. commodity ETFs went into the two gold funds. Spyder alone had a net inflow of $5.3 billion and iShares Gold $2.4 billion. The huge cash infusion coincided with a 12th straight year in which gold prices rallied.

Spyder and iShares were on a roll from August when bullion prices began climbing on expectations that the U.S. Federal Reserve would initiate a third round of quantitative easing, or QE3, to boost the economy. Fed easing weakens the dollar, compelling investors to find a better store of value, and gold has emerged as the favorite alternative.

As widely expected, the Fed launched QE3, promising to buy $45 billion worth of U.S. Treasury bonds and $40 billion of mortgage-backed securities per month. Fears of a U.S. fiscal crisis through December added to investors’ worries, pushing them deeper into gold ETFs.

The trend changed in January after early signs of a stronger economy in the United States, Europe and China, which made investors more willing to take risk. Money began flowing out of gold and into oil, base metals and equities, with U.S. stocks hitting 5-year highs.

Gold came under renewed pressure this week after the Fed suggested it might scale back its bond-buying program, which had been the lifeblood of the shiny metal’s rally over the past 3 years. The spot price of bullion is down 6 percent so far for 2013 versus last year’s 7 percent gain.