Diamonds are set to slump further, according to a hedge fund whose bet on marijuana made it the world’s best performer in 2016.
Prices of the precious gem may slump as much as 10 percent this year as it loses appeal with younger consumers and faces challenges from synthetic alternatives, said Singapore-based Ben Cleary, who co-manages the $500 million Tribeca Global Natural Resources Fund.
“Diamonds are marketed on the idea that they will forever represent a pinnacle of luxury and materialist desire,” Cleary wrote in an email. “Our concern is whether a younger generation of millennials will have the same allegiance to the same products as their parents and grandparents.”
Polished diamond was one of the worst-performing commodities in 2017, with the gem’s reputation tarnished by fakes and stones mined in conflict zones. Demand may stagnate for another decade unless the industry spends more to lure consumers, Bain & Co. wrote last month in its annual report on the industry.
The Tribeca fund surged 145 percent in 2016, the most of more than 10,000 funds tracked by data provider Preqin, fueled by bets on North American marijuana producers that benefited from the legalization of medical and recreational cannabis use.
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