After years of redemptions, commodity funds are showing healthy increases, with Q1 inflows close to $4 billion, the most of any type of hedge fund.
So observes DMS Managing Director John D’Agostino, in an article titled, ‘Return of the MAC (Multi Asset Commodity Fund)’, published in Hedge Fund Intelligence (May 20th edition). Drawing on analysis done by DMS Offshore Investment Services “on its universe of more than 2,000 funds” Mr. D’Agostino notes that commodities as an asset class has been under-allocated to (or over withdrawn) for the past five years. Reasons for redemption ranged from concerns about volatility and strategy complexity (smaller investors) to concern about diminished liquidity in commodity financial derivatives markets (larger investors).
“By the start of this year, however, it was becoming clear that investors had begun reevaluating commodities funds,” he states, for reasons based on belief in an oversold commodities market, or in markets that have flushed out enough to start being tradeable, cross asset correlation and returning seeking.
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