Diego Parrilla, former head of Asian commodities at Bank of America Merrill Lynch, has set up a hedge fund in Singapore and will start trading in the fourth quarter.
The NARECO Commodity Low Vol Alpha fund will invest in raw-material derivatives, not in equities or in physical markets, said Parrilla, the chief investment officer, who also spent four years at Goldman Sachs Group Inc. The fund is seeking to raise $500 million in three years, he said in an e-mail.
The number of hedge-fund startups in Asia fell 45 percent to 60 in the first half, 14 of which were in Singapore, according to data from researcher Eurekahedge Pte. Commodities measured by the Standard & Poor’s GSCI Index of 24 raw materials have risen 3.3 percent this year, after soaring 81 percent in two years, as a slowing global economy amid sovereign-debt concerns helped offset shortages in corn and copper.
“Initially I’m focusing on a relative-value, market-neutral type of fund as there’s a gap in the market,” said Parrilla, referring to strategies where investors seek to profit from price gaps between commodities or settlement dates.
NARECO Advisors Pte Ltd. is looking to hire two more people for trading and analysis in addition to the three-person team, said Parrilla, who is also chief executive officer. The name NARECO stands for natural resources and commodities.
Parrilla left Bank of America Merrill Lynch in March, where he was Singapore-based head of commodities for Asia-Pacific and previously global head of commodity investor and corporate solutions in London. He started his career at JPMorgan in London as a precious metals trader in 1998.
The S&P GSCI Index, little changed today at 652.36, has dropped 14 percent from the year’s high of 762.22 in April.