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Commodity-focused hedge funds generated strong returns in 2021, and investors who were wary of these options for a long time are now pouring money into them, betting that the recovery of the pandemic will help oil and gas, crude metals, grains and more. The demand for products like sugar will increase. and coffee.
Although many investments have been directed at other investments involving commodities, hedge funds are a more surprising option after years of withdrawal by investors in these funds, which led to the closure of many companies operating in the sector.
Among the funds that made big gains this year are those run by renowned oil investor Pierre Andurand. Its commodity fund returned 27% in the year to the end of May, while its discretionary fund returned 33%, a person with knowledge of the matter told Reuters on Wednesday.
UK-based Ode Asset Management gained 10.7% over the same time period with its long-short equity fund, which bets on the commodities segment. Westbeck Capital Management, also from the UK, posted a profit of 75% in the year to June 2.
According to a preliminary letter to investors seen by Reuters, Auspice Capital, a computer-controlled commodity-focused fund, returned 17.7%, with metals, coffee and sugar contributing to the result of the rally.
“The bull trend continues for the entire commodity complex,” said Jean-Louis Le Me, co-founder of Westbeck. “We believe oil is about to climb and the commodity complex should reach new highs in this cycle.”
Commodity hedge funds outperformed 6.5% in April, compared to an overall average return of 2.5% for hedge funds, according to the latest data from Einvestment.
These funds use a variety of strategies, betting on everything from pure commodities to stocks and corporate debt.
According to Hedge Fund Research, after the sector recorded a record $9.8 billion in outflow between 2016 and 2019, about $492 million was poured into commodity hedge funds in the first three months of 2021, more than half of what was seen last year. There was more flow.
While recent data from the US Commodity Trading Commission (CFTC) suggests asset managers’ bullish bets on the commodity have eased, hedge funds focusing on products from natural gas to grains and copper say there is positive momentum. likely to continue.
Troy Gesky, partner at hedge fund Skybridge, said, “When you look at the positions of almost every major hedge fund, you can see that everyone is waking up and saying there could be a long cycle of commodities. We How can I take advantage of this?” Capital, based in the US and with $7.5 billion under management.
