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David Friche is a trained physicist. This allowed him to access the hedge fund world through computerized arbitrage strategies. He currently manages Banque Syz’ commodity fund of hedge funds, the ACE Natural Resources Fund. Since its launch six months ago, the fund outperformed commodity indices. Swiss paper Le Temps asked him about his methodology:

“We look for managers who have competitive edge (…) It might their ability to focus on a niche market or their network which would allow them to get access to better information.”

“We select professionals who have experience. They must have managed hedge funds for 3 or 4 years, and have a longer experience in commodities. They might have been analysts for 15 or 20 years, just when commodities were not fashionable (...) We prefer 50-year old commodities manager rather than 30-year olds. A lot of funds are being launched at the moment. We like to trust people who have talent and experience rather than just talent.”

“Some of the funds we have allocations in, like the one who focuses in natural gas, are invested on hundreds of contracts. We don’t know them all, but we receive risk management reports”.

When investors will leave commodity index funds, as “almost US$100 billion are invested in these kinds of portfolios, a reflux in liquidity will increase the price volatility, which will be good for hedge funds, who know how to take advantage of that”.

On whether he would invest in (ex-Amaranth) Brian Hunter......................

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