Surging commodity prices are prompting investors to put more cash back into metals, grains and energy, according to Kenmar Group, which expects funds under management to grow by about a third to $2 billion by next March.
Investors are returning as funds investing in commodity and managed-futures hedge funds are making money, Co-Chief Executive Officer Kenneth Shewer said in an interview. Assets managed by the Rye Brook, New York-based group peaked at $4 billion in 2008, before the financial crisis led to withdrawals, Shewer said.
Commodity assets under management advanced to a record $320 billion in September, according to Barclays Capital. Fuels, metals and farm products have surged this year from lows seen in 2008 as the U.S. emerged from recession and China led expansions in Asia. Copper advanced to a record today.
“For commodities and managed futures, performance has been strong in the past two, three months and virtually all of our managers in the space have been profitable,” Shewer said in Singapore yesterday. “I’d be surprised if we wouldn’t go back across the $2 billion mark by the end of the first quarter next year as a result of new assets raised.”
Three-month copper traded at an all-time high of $8,945 a metric ton today after rising 21 percent this year. Gold for immediate-delivery touched a record $1,424.60 an ounce on Nov. 9, and silver has gained to a 30-year high. Cotton futures reached a record yesterday, and soybeans have traded at a 26-month high.
About 50 percent of Kenmar’s assets are in commodities and natural resources and “this is where we expect to see the most growth,” Shewer said. Shewer and partner Marc Goodman founded Kenmar in 1993 and each owns half of the firm, which takes its name from a contraction of their own.
The Kenmar Global Resource Fund, which invests in commodity hedge funds, returned 3.2 percent in October, taking gains over 10 months to 1.5 percent, he said. The Global Managed Futures Fund rose 3.6 percent from January to October, while the fund of funds investing in agriculture was up 5.3 percent, he said.
Funds of hedge funds attracted $250 million in new capital in the three months ended September, the second quarter in the last nine in which clients added assets, Chicago-based Hedge Fund Research Inc. said Oct. 19.
More investors are placing funds into so-called managed accounts that are separate from the main pool of funds, Shewer said. In such accounts, investors are typically allowed to make withdrawals at will or more frequently than with the main pool.
Kenmar’s fund-of-funds business also invests in so-called multistrategies, trading everything from stocks to commodities, and seeking to profit from broad economic trends, he said. That fund, known as Kenmar Insignia, returned 5 percent in the first 10 months of the year, he said.
The number of Asia-based hedge fund managers is expanding because of the “more favorable regulatory environment,” said Shewer. Investments with such managers account for 12 percent to 13 percent of Kenmar’s assets, he said.
The company’s office in Singapore, opened in 2008, is run by Chris McLeod, formerly at ABN Amro Group NV and UBS AG.
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