The world’s biggest platinum-backed exchange-traded fund (ETF), based in South Africa, last week reported its largest outflow after the platinum price in rands hit five-and-a-half-year highs, prompting domestic investors to cash in gains.

NewPlat ETF, which tracks the rand-denominated platinum price, climbed more than 12 percent from the start of the year to its late January high of R16 178 an ounce as the rand hit five-year lows against the dollar.

The price had slipped from that high by yesterday afternoon. With platinum being fixed in London at $1 380 and the rand bid at R11.0569 to the dollar at 5pm, an ounce of platinum was worth R15 259.

Rand-denominated platinum is up nearly 8 percent on the year, while dollar-priced spot platinum is up just 1.4 percent.

Last week the NewPlat ETF’s holdings fell by 16 019 ounces to 885 206 ounces, its largest one-week drop since its launch in April last year.

The fund’s investors are largely South African pension and other funds, analysts say.

“The key thing that has changed in the past couple of weeks is that the rand has blown out against the US dollar,” Justin Froneman, an analyst at SBG Securities, said. “The rand platinum price has gone up, and there was quite a lot of profit sitting on the table.

“You will find there will be some people normalising their portfolio and taking some profit.”

Last week’s withdrawals brought NewPlat ETF’s total outflow since the start of the year to just over 24 000 ounces. While the drop amounts to just 2.7 percent of the total, it nevertheless marks a turnaround for a fund that attracted extremely strong inflows for most of 2013.

The fund averages weekly outflows of 4 061 ounces this year, compared with average weekly inflows of 23 105 ounces last year.

Precious metal ETFs issue securities backed by physical metal, giving buyers exposure to the underlying price without taking delivery of the physical asset. They were a popular way to invest in the sector after the financial crisis.

The NewPlat fund attracted a surge of interest after its launch as investors sought to benefit from an expected rise in platinum prices while avoiding exposure to the platinum producers, which have been dogged by rising costs and shrinking margins.

Within four months of its launch, the fund had become the largest of its type in volume terms.

But the expected price gains in dollar terms have not come through due to persistent weakness in demand, particularly from the European car sector, which uses the metal in catalytic converters, and the weakness in gold, the bellwether precious metal.

Average spot platinum prices fell 4 percent last year, whereas a Reuters poll at the beginning of that year showed expectations of a 10 percent rise.

Some investors might have been disappointed by the metal market’s lack of reaction to threats to South African supply last year, analysts said, and were now taking advantage of the currency-related price spike to take profits.

“People may be getting concerned that platinum prices in dollars have not been reacting much to the [mining] strike and are therefore taking some profits, particularly the earlier investors in the ETF, since in rand terms the metal has performed well,” Investec analyst Marc Elliott said.

Some South African equities might also now appear to be a more attractive buy, he said.

“A lot of that ETF demand was people pulling out of the equities and going into the metal, so that may now be flowing back the other way.”