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Benedicte Gravrand, Opalesque London: Duncan Letchford, lead-portfolio manager at the London commodity funds house Galena, talks about the metals market status quo and his metals fund.
Commodities funds win and lose
Trading remains high in the commodities – especially long/short trading - despite prices generally sliding down since this summer. But some investors have been pulling out of this sector because, as a hedge to stocks, it is no longer viable – commodities and stocks have become more correlated of late.
In the last month, a number funds such as Beach Horizon, Global Advisors, SVM, Merchant, Krom River, Mulvaney, Sextant, Tiberius and Sprott, gained on the back of falling commodity prices, especially CTAs/managed futures funds and some long/short funds. Some fund have been hurt too, especially those that bet on rising energy prices and agriculture: RAB Capital, Deephaven Global, Diapason L/S, for example.
Hedge funds are still dynamically invested in the commodities market: the FT reported last month that they were finding volatility trading too expensive and were turning to commodities trading instead, as derivatives based on commodity indices provided cheaper access to the “long volatility” trades, a successful strategy (...................... To view our full article Click here
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