NEW YORK, Aug 6 (Reuters) – An ex-Glencore (GLEN.L) oil trader and a veteran grains merchant with futures broker R.J. O’Brien are among those behind the largest number of commodity fund launches in 3 years despite investor worries the multi-year rally in those markets is over.
A dozen hedge funds trading raw materials derivatives on discretion were launched in the first six months of this year, the same as in the whole of 2012, data from London-based research house Preqin showed. In 2011, only seven of such funds took off, the smallest number in 5 years.
The new funds are led by managers who are convinced they can be outliers in one of the toughest commodity markets in years. The funds typically begin trading with a few million dollars of the managers’ own money and cash from family and friends, before seeking outside capital.
The launches coincide with talk the commodities “supercycle” of the past decade has been thwarted by the slowing of China’s phenomenal growth. That has added to the caution of investors who had less concern allocating to hedge funds when oil, metals and grains prices were hitting record highs a few years back. “There’s certainly a mismatch now, with commodity managers seeing opportunities and investors remaining wary,” said Amy Bensted, spokesperson at Preqin, which collects data on the alternative assets industry.
Braving this market is former Glencore oil trader Jonathan Goldberg, who previously traded grains and metals for Goldman Sachs (GS.N). He hopes to raise $100 million for his New York-based fund BBL Commodities, sources briefed on his plan said. [ID:nL1N0FW0TL]
Goldberg is meeting potential investors to accept a minimum of $1 million from each, the sources said. Goldberg, who will trade price spreads between different crude and petroleum products, did not return an email seeking comment.
Ron Anderson, who traded grains for 25 years at New York’s two-century-old Continental Grain Company, in January started a discretionary trading program at County Cork LLC that looks at price disparities in soybeans and soy products on the physical and futures markets.
Anderson’s program is one of several run by County Cork, based in Skokie, Illinois and owned by futures broker R.J. O’Brien. County Cork said Anderson was managing $4 million now, and had a target of $30 million by 2014.
Gregory Cain, who headed the Far East business of U.K. metals hedge fund Ebullio Capital, in March launched a multi-commodity fund called GCGM Capital, which has a bias toward industrial metals. GCGM, based in Kent, U.K., did not return emails seeking comment.
For investors, backing these startups means taking a calculated gamble that their money will be safe and turn a profit in the not-too-distant future.
While commodity hedge funds outperformed their equity-focused peers before the financial crisis erupted in 2008, and again in 2009 and 2010 when prices rebounded, their returns have been mostly abysmal since then.
The 19-commodity Thomson Reuters-Jefferies CRB index .TRJCRB is on track to its third yearly loss, falling 4 percent through July after a 3 percent drop in 2012 and an 8 percent decline in 2011.
This year, the majority of commodity funds lost money every month through June, according to a closely-followed Newedge index that tracks their performance. [ID:nL6N0FO2Q9]
Preqin data shows the launch of discretion-based Commodity Trading Advisors — the official tag for commodity hedge funds
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