News

September 22, 2008

Global Financial Crisis Reverberates Across Exchange Traded Funds

By Sally White

As crude oil and global equities rallied on government moves to rescue the world’s banking system in a nightmare week, commodities moved up, too. The Standard & Poor’s GSCI index of 24 raw materials jumped by 4.2 per cent on Friday.

However, in the global financial crisis, the woes of distressed giant US insurer AIG reverberated through commodity markets as it acts as counter party to a substantial portion of the US$30 billion invested in the Dow Jones AIG Commodity Index. The London Stock Exchange suspended trading for a number of Exchange Traded Funds issued by ETF Securities, which are backed by matching products from AIG. ETF Securities said that 113 of its 129 ETF products were affected.

An emergency...