Vector Commodity Management LLP’s assets under management slumped 86 percent this year after losing money since 2011.
The energy hedge fund run by former Goldman Sachs Group Inc. trader Gilbert Saiz managed $43 million by the end of April, according to a letter to investors obtained by Bloomberg News. Its December statement showed assets of $318 million. Vector’s trading of mainly crude and oil products resulted in a 4.9 percent loss from January through April, the letter showed. A Vector executive in London, who asked not to be named in line with company policy, declined to comment by phone today.
Commodity hedge funds have struggled to turn a profit in recent years as global economic and political developments whipsawed markets. Hedge funds tracked by the Newedge Commodity Trading Index lost an average 0.5 percent in the first four months and 1.1 percent in April alone.
“It has been an extremely difficult year for oil traders,” Stephen Schork, president of the Schork Group, said by phone from Villanova, Pennsylvania. “A lot of investment has been finding its way into commodity funds on the long side, and the economic realities of not enough demand and too much supply have caught a lot of these funds off guard.”
Saiz, 37, started Vector in June 2010 after about a decade at Goldman Sachs Group Inc. where he rose to head its European fuel oil desk. The fund was locked in April 2011 after assets under management climbed to almost $600 million, people with knowledge of the matter said at the time. After returning 8.6 percent in 2010, Vector lost 14 percent in 2011 and 1 percent last year.
The letter didn’t disclose a reason for the drop in assets under management. Vector invests mainly in relative-value strategies that seek to profit on price gaps between different oil products or geographical variations in energy costs.
Economic growth in China, the biggest consumer of everything from copper to energy and zinc, unexpectedly lost momentum in the first quarter, expanding 7.7 percent from a year earlier compared with an 8 percent median forecast in a Bloomberg News survey.
“Given the elevated levels of net speculative length in the market to begin the month of April, commodity prices experienced a sharp sell-off from the negative growth news,” Saiz said in last month’s investor letter. “Greater demand pull from refinery runs and reduced spare capacity should certainly create upside potential to crude structure this summer and should provide a base of support at a minimum for oil prices.”
West Texas Intermediate, the U.S. crude benchmark, dropped 3.9 percent in April, trading at its lowest level this year, after climbing 5.6 percent in March.
Assets at Clive Capital LLP fell by $600 million this year to $1.35 billion at the end of March, according to a person familiar with the matter. Clive, which managed $3.6 billion at the end of 2011, declined 8.8 percent last year and 10 percent in 2011, according to two people with knowledge of the matter who asked not to be named because the information is private. Clive’s hedge fund posted investment gains of 1.8 percent in the year’s first four months, one of the people said.
BlueGold Capital Management LLP, the $1 billion energy hedge fund co-founded by Pierre Andurand, liquidated in April 2012 after losing 34 percent in 2011. Fortress Investment Group LLC (FIG) said in May last year it would shut a $500 million commodities fund after it lost almost 13 percent in the past four months. Billionaire trader John Arnold told investors on May 2, 2012, he would close his Centaurus Energy Fund.
Andurand’s new fund, Andurand Capital Management LLC, based in London, returned 25 percent since its February inception after predicting that the differential between New York and London crude oil would drop, two people with direct knowledge of the matter said this month.
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