Salient to Investors:
Cargill, the world’s largest grain trader, shut its commodities hedge fund last month, a sign that commodity speculators are in trouble.
Donald Steinbrugge at Agecroft Partners said hedge funds are supposed to make money in both bull and bear markets but managers bias towards rising prices. Steinbrugge said demand for commodity-oriented hedge funds is very low as no one wants to catch a falling knife. Christoph Eibl at Tiberius Asset Mgmt said no money is going into commodities.
The Bloomberg Commodity Index is down 29% in the past year and 18 of its 22 components are in a bear market. Hedge Fund Research said assets of commodity hedge funds are 15% below the peak 3 years ago. The Newedge index suggests natural resource funds have lost money for clients during most of the past 4 years. At the end of June, the average commodity hedge fund had fallen 7% since the January 2011 peak vs. the S&P 500 index gain of 80%, including dividends. The index rose almost sixfold from 1999 to a peak in June 2008.
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