Clive Capital Cuts Fees After Losses Prompt Client Withdrawals

Clive Capital LLP, Europe’s biggest commodity hedge fund, will cut its fees after posting two consecutive years of losses, according to a letter sent to clients today.

Clive will start charging investors in its class B shares a 2 percent management fee and a 20 percent performance fee from April, down from 2.5 percent and 25 percent respectively, the London-based hedge fund said in the letter, which was obtained by Bloomberg News. The decision comes after client withdrawals and investment losses prompted assets under management to shrink 46 percent to $1.95 billion.

“As a result of two challenging years for the fund, we have decided to lower our Class B fees,” Clive said in the letter. “We are positive about the opportunities in commodity markets in 2013 and optimistic on performance going forward.”

Elizabeth Holstein, who oversees investor relations at Clive in London, declined to comment on the fee reduction.

Commodity hedge funds have struggled to make money over the past two years, whipsawed by announcements by government officials that spurred price swings in markets from oil to wheat. Clive, which was founded by former Moore Capital Management LLC trader Chris Levett, slumped 8.8 percent last year after falling 9.9 percent in 2011.

The reduction in fees will bring Clive in line with the broader hedge-fund industry, which typically charges 2 percent to oversee client money and 20 percent of any investment gains.

Investors had been willing to pay a premium to Clive after it outperformed rivals in previous years, gaining 44 percent in 2008, 17 percent in 2009 and 20 percent in 2010. The Newedge Commodity Trading Index, which tracks the performance of the biggest commodity hedge funds, fell 7.8 percent in 2008 before gaining 11 percent in 2009 and 10 percent in 2010.

Clive said it will continue to manage its business “efficiently” so that the reduced fees won’t affect its operations, according to the letter.

To contact the reporter on this story: Jesse Westbrook in London at jwestbrook1@bloomberg.net;

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net