Merchant Commodity Fund Slumps Amid Decline in Oil, Iron Ore

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  • August drop wipes out year-to-date gains for Merchant fund
  • Commodity hedge funds have had losses this year, data show

The Merchant Commodity Fund, managed by Doug King and Michael Coleman, fell 10.6 percent in August as commodities slumped, wiping out gains for the year.

The fund lost 10.3 percent in the first eight months of 2015, Coleman confirmed via e-mail from Singapore, declining to comment further.

Hedge funds investing in commodities have chalked up losses this year amid a slump in the prices of crude oil and iron ore. The Eurekahedge CTA/Managed Futures Hedge Fund Index was down 0.8 percent in the period, on track for the second annual decline in 15 years. Some commodity hedge-fund managers lost money in August as they bet prices of oil and iron ore would extend declines in a month when those commodities climbed.

The Merchant Commodity Fund, which started trading in 2004 and is based in London and Singapore, made 59 percent last year from trades focused on trends in commodities markets, Chief Investment Officer King said in March. Assets under management fell to $211 million in August, the lowest since November, from $241 million in July, according to a letter to investors obtained by Bloomberg News.

Crude oil has fallen 17 percent this year, extending a loss of 47 percent in 2014, which was the biggest annual drop since 2008. Iron ore is down 20 percent after falling 44 percent last year.

Declines came mostly from relative value plays among various commodities, notably in energy, the fund said in the letter.