Hedge Funds Had Worst Year Since 2008 Betting on Commodities

Copper, Gold And Silver Bullion Manufacture At KGHM Polska Miedz SA Smelting Plant

A worker uses a rod to control the flow of molten silver.

Photographer: Bartek Sadowski/Bloomberg
  • Raw-material funds sank 5.2 percent in 2015, SocGen data show
  • Funds at Trafigura and Cargill closed during the selloff

Hedge funds betting on raw materials had the worst performance since the global financial crisis of 2008 as everything went wrong for commodities.

The funds lost 5.2 percent in 2015 and recorded losses in 10 out of 12 months, based on an index compiled by Societe Generale SA that tracks the performance of commodity trading strategies including equities and physical products.

Managers lost money and commodity funds from Trafigura Pte Ltd. to Cargill Inc. closed last year as China’s slowing economy added to the global glut in most raw materials. Losses from poor performance and investor withdrawals left assets at the top 10 commodities hedge funds at less than $10 billion, compared with more than $50 billion in 2008, Trafigura said last month.

"Most hedge funds have exposure to markets," said Don Steinbrugge, managing partner of Agecroft Partners LLC in Richmond, Virginia. "If the market sells off a lot, it’s going to hurt their performance."

The Societe Generale index tracks funds betting on natural resources with assets under management greater than $30 million. Losses across commodities have deepened in 2016, with the biggest losses coming from oil and gasoline.

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