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European investors are clamouring for commodity exchange traded funds, swelling exchange traded fund assets under management in the region to double that of the US market.

Commodity exchange traded funds represent 8.98 per cent of total exchange traded fund assets under management in Europe compared with 4.40 per cent in the US, Deutsche Bank has claimed. In Europe, exchange traded commodities are the preferred commodities trading vehicle, accounting for 84 per cent of turnover in that sector, while in the US exchange traded funds are the vehicle used for 97 per cent of commodity trades.

It is expected that Europe will eventually follow the US lead and switch away from exchange traded commodities in favour of exchange traded funds.

Manooj Mistry, head of Deutsche Bank x-trackers believes this will occur "naturally" over the next two to three years.

He said: "Previously viewed as a cyclical rather than tactical investment commodities have, with the exception of gold, been over-looked as pure investment vehicles. With the low charges, flexible structures and broad variety of market tracking options it is no surprise this market has increased so rapidly in the UK and Europe in such a short period of time."

Of the 8.98 per cent total exchange traded fund assets under management in Europe for the commodity sector, Mr Mistry said two-thirds are presently exchange traded commodities. Europe also has a higher turnover in commodity products accounting for 12 per cent of all exchange traded funds compared with 3 per cent in the US.