Bloomberg reported that hedge funds speculating on commodities have had three-digit returns going short on commodities during the lockdowns, and are having double-digit returns this year going long on the same commodities. Three weeks ago, the Financial Times had a similar report, entitled “Hedge Funds Reap Windfall by Betting on Specialist Commodity Markets.” Surprise: the “hot” commodities these days are gas and CO2 credits, the latter traded as if it were a commodity.
“Hedge funds that expanded into U.K. natural gas and German electricity have made big gains this year from the European energy crisis and sharp moves in specialist commodity markets with one fund soaring by more than 40%,” the FT reported on Sept. 24. Hedge funds mentioned are Man Group and Leda Braga’s Systemica Investments and Florin Court Capital.
“Most hedge funds in the so-called managed futures sector use algorithms to try to latch on to trends in mainstream bond, currency, stock and commodity futures. But the sector has swelled in size from $30 billion two decades ago to more than $300 billion today, according to data provider HFR.” (https://www.ft.com/content/208587a6-6d38-43f5-b2b1-5d63781f7bfd)
Bloomberg instead focuses on the best-performing case of hedge funds owned by Pierre Andurand, an Oxford-trained French mathematician who is a star among oil traders (his nickname is “Oil King"). His Andurand Commodities Discretionary Enhanced Fund had gains of 154% last year, while his older Endurand Commodity Fund had gains of 68% last year and is up 33% this year.
