Launch Partners

Launch Partners

Commodities: Investors primed on gold

Key Highlights

  • Retirement funds are the largest holders of commodities funds
  • The European region recorded the highest growth in terms of AuM
  • Rising gold prices could spur new fund launches in 2025

Overview

The US Federal Reserve’s decision to cut interest rates toward the end of September 2024 had a positive impact on the commodities sector – with gold especially boosting on gains made earlier in 2024, when persistent inflationary pressures prompted investors to adopt hedging strategies to safeguard portfolios against economic uncertainty.

The global outlook for gold remains upbeat with more US Fed rate cuts anticipated in 2025, as lower rates typically lead to higher gold prices – which already charted double-digit percentage gains over the course of 2024.

Additionally, gold-backed instruments play a crucial role in liquidity management strategy in Islamic debt and investments. Commodity Murabahah contracts also leverage gold to ensure compliance and provide an efficient liquidity solution. These are among the key reasons why gold investments form the bulk of Islamic commodity fund holdings.

Chart 1: Commodities funds by classification

Source: IFN Investor Funds Database

The IFN Investor Funds Database features funds oriented toward income growth and risk management, incorporating commodities into their portfolios. Retirement funds represent the largest holders of commodities within these categories, valued at US$8.12 billion in assets under management (AuM) as at the 31st December 2024.

Turkiye is a key jurisdiction for commodity funds, with gold participation funds accounting for the highest AuM valuation.

Chart 2: Top performing Islamic commodity funds by three-month returns

Source: IFN Investor Funds Database

The last quarter of 2024 demonstrated strong returns for commodity funds, with the IFN Investor Funds Database tracking stronger performances driven by higher allocations to gold products – as Islamic commodity funds primarily invest in precious metals. A small minority of these funds also incorporated Shariah compliant shares, further diversifying their portfolios.

AuM growth

The Islamic commodities asset class funds in Q4 2024 performed better compared to Q3 2024. Notably, the AuM for commodity funds rose across the four regions, with Europe experiencing the highest percentage growth at 33.03%.

  • Europe: Up by 33.03% from US$6.95 billion to US$9.25 billion.
  • Middle East: Up by 15.56% from US$10.15 million to US$11.73 million.
  • Africa: Up by 9.39% from US$17.05 million to US$18.65 million.
  • Asia Pacific: Up by 7.42% from US$33 million to US$35.45 million.

The Americas do not have any Islamic commodities funds at the time of writing.

Table 1: Top performing Islamic commodities funds by region in Q4 2024

RegionFund NameFund ManagerThree-month returns (%)
Asia PacificMeezan Gold FundAl Meezan Investment Management6.47
EuropeAgesa Life and Retirement Gold Participation Retirement Investment FundAgeSA Hayat ve Emeklilik7.85
Middle EastAlbilad Gold ETFAlbilad Capital11.96
AfricaAZ-GoldAzimut Egypt Asset Management-3.14

Source: IFN Investor Funds Database

Outlook

Looking ahead to 2025, the outlook remains favorable for commodity fund performances, particularly within income growth and risk management portfolios. With precious metals like gold anticipated to maintain their momentum due to robust central bank demand and diversification strategies, funds with significant commodity exposure are well-positioned to deliver steady returns.

This notable increase in gold prices has led to the anticipated launch of new gold funds in 2025 – as many investors are expected to consider gold as an essential component of their investment portfolios, recognizing its potential for continued gains.

With its recognition as a safe-haven asset during times of economic uncertainty, the consensus of analysts predicts that gold prices could rise significantly in 2025, with forecasts suggesting potential levels topping US$3,000 per ounce under favorable conditions.

Islamic commodity funds tracked by the IFN Investor Funds Database

RankFund NameFund ManagerUS$ AuM (millions)
1Turkiye Life and Retirement Gold Participation Retirement Investment FundTurkiye Hayat Ve Emeklilik                       3,018.15
2Garanti Retirement and Life Gold Participation Retirement Investment FundGaranti Emeklilik Ve Hayat                       1,242.38
3Anadolu Life Retirement Gold Participation Retirement Investment FundAnadolu Hayat Emeklilik                       1,187.92
4The Royal Mint Responsibly Sourced Physical Gold ETCHANetf Management Limited                           998.13
5Participation Retirement and Life Gold Participation Retirement Investment FundKatilim Emeklilik ve Hayat                           350.48
6Turkiye Life and Retirement Precious Metals Participation Retirement Investment FundTurkiye Hayat Ve Emeklilik                              85.16
7AXA Life and Retirement Gold Participation Retirement Investment FundAXA Hayat ve Emeklilik                              60.85
8Bereket Retirement and Life Gold Participation Retirement Investment FundBereket Emeklilik ve Hayat                              45.20
9Participation Retirement and Life Precious Metals Participation Retirement Investment FundKatilim Emeklilik ve Hayat                              36.17
10Active Portfolio Gold Participation FundAktif Portfoy                              28.12
11Azimut Portfolio Precious Metals Participation FundAzimut Portfoy                              26.53
12TradePlus Shariah Gold Tracker ETFAHAM Capital Asset Management                              22.99
13AZ-GoldAzimut Egypt Asset Management                              18.65
14Albaraka Portfolio Bereket Foundation Support Gold Participation FundAlbaraka Portfoy                              16.18
15Oyak Portfolio Gold Participation FundOYAK Portfoy                              11.90
16Albilad Gold ETFAlbilad Capital                              10.87
17Meezan Gold FundAl Meezan Investment Management                              10.09
18Agesa Life and Retirement Gold Participation Retirement Investment FundAgeSA Hayat ve Emeklilik                                 8.69
19Garanti Portfolio Gold Participation FundGaranti Portfoy                                 8.60
20ATA Portfolio Gold Participation FundATA Portfoy                                 7.87
21Nurol Portfolio Gold Participation FundNurol Portfoy                                 5.75
22Meezan Tahaffuz Pension Fund (Gold)Al Meezan Investment Management                                 2.37
23Re-Pie Portfolio Gold Participation FundRe-Pie Portfoy                                 1.48
24Yaqeen Gold FundYaqeen Capital                                 0.87
Categories:
Key Highlights Retirement funds are the largest holders of commodities funds The European region recorded the highest growth in terms of AuM Rising gold prices could spur new fund launches in 2025 Overview The US Federal Reserve’s decision to cut interest rates toward the end of September 2024 had a positive impact on the commodities sector – with gold especially...

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