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Commodity Surge Is Luring Investors Back to Funds, Kenmar Says
2010-11-11 04:10:36.292 GMT
By Chanyaporn Chanjaroen
Nov. 11 (Bloomberg) -- Surging commodity prices are
prompting investors to put more cash back into metals, grains
and energy, according to Kenmar Group, which expects funds under
management to grow by about a third to $2 billion by next March.
Investors are returning as funds investing in commodity and
managed-futures hedge funds are making money, Co-Chief Executive
Officer Kenneth Shewer said in an interview. Assets managed by
the Rye Brook, New York-based group peaked at $4 billion in 2008,
before the financial crisis led to withdrawals, Shewer said.
Commodity assets under management advanced to a record $320
billion in September, according to Barclays Capital. Fuels,
metals and farm products have surged this year from lows seen in
2008 as the U.S. emerged from recession and China led expansions
in Asia. Copper advanced to a record today.
"For commodities and managed futures, performance has been
strong in the past two, three months and virtually all of our
managers in the space have been profitable," Shewer said in
Singapore yesterday. "I'd be surprised if we wouldn't go back
across the $2 billion mark by the end of the first quarter next
year as a result of new assets raised."
Three-month copper traded at an all-time high of $8,945 a
metric ton today after rising 21 percent this year. Gold for
immediate-delivery touched a record $1,424.60 an ounce on Nov. 9,
and silver has gained to a 30-year high. Cotton futures reached
a record yesterday, and soybeans have traded at a 26-month high.
'Most Growth'
About 50 percent of Kenmar's assets are in commodities and
natural resources and "this is where we expect to see the most
growth," Shewer said. Shewer and partner Marc Goodman founded
Kenmar in 1993 and each owns half of the firm, which takes its
name from a contraction of their own.
The Kenmar Global Resource Fund, which invests in commodity
hedge funds, returned 3.2 percent in October, taking gains over
10 months to 1.5 percent, he said. The Global Managed Futures
Fund rose 3.6 percent from January to October, while the fund of
funds investing in agriculture was up 5.3 percent, he said.
Funds of hedge funds attracted $250 million in new capital
in the three months ended September, the second quarter in the
last nine in which clients added assets, Chicago-based Hedge
Fund Research Inc. said Oct. 19.
More investors are placing funds into so-called managed
accounts that are separate from the main pool of funds, Shewer
said. In such accounts, investors are typically allowed to make
withdrawals at will or more frequently than with the main pool.
Kenmar's fund-of-funds business also invests in so-called
multistrategies, trading everything from stocks to commodities,
and seeking to profit from broad economic trends, he said. That
fund, known as Kenmar Insignia, returned 5 percent in the first
10 months of the year, he said.
The number of Asia-based hedge fund managers is expanding
because of the "more favorable regulatory environment," said
Shewer. Investments with such managers account for 12 percent to
13 percent of Kenmar's assets, he said.
The company's office in Singapore, opened in 2008, is run
by Chris McLeod, formerly at ABN Amro Group NV and UBS AG.
--Editors: Jake Lloyd-Smith, Matt Oakley
To contact the reporter on this story:
Chanyaporn Chanjaroen in Singapore at +65-6499-2837 or
cchanjaroen@bloomberg.net
To contact the editor responsible for this story:
James Poole at +65-6212-1551 or
jpoole6@bloomberg.net
