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Benedicte Gravrand reports from Hedge Funds World Zurich, a conference organised by Terrapinn (see details here).
How family offices play commodities
Rob-Roy Roedel, of Zurich-based Plenum Family Office, said that most families have exposure to commodities, usually in gold. But some are switching their exposures as some commodities have become consistent alpha generators. Some of the new stars are; shipping (which can be tracked through FAA), water (and the likes of industry around it), uranium (although there have been price jumps recently), power (in the U.S., in Scandinavia). He recommends investors having 10 to15% of their portfolio in commodities, which could include gold, oil or real assets (land, forestry…).
Hedge funds can get in and out quickly in commodities markets, some of which are very deep. As HFs are flexible pools, they have better chances to attract good returns.
Sean Corrigan, strategist at Diapason Commodities Mgmt, said that the commodities markets have evolved in two ways, (1) in terms of fundamentals, (2) in the financial markets. There is a current hype in commodities, and a business cycle on top of it. Passive indexing has also taken off in a big way as we are seeing the creation of many new indices. The next 6 to 12 months will be testing due to the business cycle. The general emphasis is away from base metals. ...................... To view our full article Click here
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