- Commodities fund to concentrate on trading in Europe
- Singapore office closure comes amid commodity fund rout
The hedge fund controlled by commodity giant Louis Dreyfus Holding BV will close its Singapore office to focus on its European trading operations, according to three people with knowledge of the matter.
The closure will eliminate four positions at Edesia Asset Management BV, about 10 percent of the hedge fund’s staff, said two of the people, asking not to be identified because the decision hasn’t been made public. Edesia currently has close to $1.9 billion in assets, down from a peak of about $2.4 billion in 2012, the people said.
It’s the latest sign of the pain for commodity hedge funds as raw material prices trade at the lowest since the global financial crisis. Trafigura Pte Ltd., another major commodities trader, said Monday it’s winding down its flagship commodity fund due to difficult market conditions. Galena Asset Management’s Chief Executive Officer and Trafigura management board member Duncan Letchford is leaving the firm.
Hedge funds betting on commodities are heading for their worst performance in seven years, after losing 4.6 percent in the first 10 months of 2015, according to the Newedge Commodity Trading index, which tracks the performance of raw-material trading strategies including equities and physical products.
Edesia, which trades agricultural commodities and metals, remains committed to the sector and has the backing of its investors, including institutional hedge funds, two of the people said. Even as metal prices have slumped to the lowest level in six years, Edesia’s performance has been flat this year, according to the people.
The company has a trading and administrative office in Geneva, a trading office in London and a two-person trading unit in Wilton, Connecticut.
The hedge fund was formed in 2008 by Louis Dreyfus Group, which controls Louis Dreyfus Commodities BV, the world’s largest rice and raw cotton trader and one of the four biggest agricultural commodity trading houses known as the ABCDs.
Billionaire Margarita Louis-Dreyfus is considering a potential sale of a minority stake in Louis Dreyfus Commodities after fellow family members signaled their intention to sell their shares, Bloomberg News reported Nov. 19.
As funds have closed some executives have joined trading houses. Glencore Plc hired Jean Bourlot, who founded commodity hedge fund Higgs Capital Management, and Kieran McKenna, who created oil hedge fund Mastic Investment, this year. At their peak, the two funds had combined assets of almost $500 million.
Cargill Inc.’s Black River Asset Management unit shut its commodity unit in July and Armajaro Asset Management LLP closed one of its funds. The founders of Vermillion Asset Management, the commodities hedge-fund firm owned by Carlyle Group, left this year after losses.
Copper prices for delivery in three months rose 0.2 percent to $4597.50 a metric ton on the London Metal Exchange at 10:15 a.m. in London. The price of the metal has declined 27 percent this year. ICE coffee futures have dropped 30 percent this year.