With their bread and butter essentially biting the dust, more commodity funds seem to be doing the same.
Black River Asset Management, the investment arm of commodities giant Cargill, is apparently shutting down four of its hedge funds according to the WSJ. It will be returning over $1 billion to investors over the next few months.
Among the funds set to close are their commodities, emerging markets, and EMEA funds, and as for the why, a lack of investor demand was cited as the main reason behind it. Though as previously mentioned, the sectors’ current unpleasantness may have factored in as well:
The shuttering of Black River’s commodity and emerging markets funds represents the latest retreat by investors from commodities and emerging markets. Major Wall Street banks like Morgan Stanley have shed physical commodities operations, which often include commodities trading units, amid a slump in raw materials prices and pressure from regulators and politicians.
Meanwhile, commodities hedge funds have seen diminished investor appetite the last few years amid volatile performance and regular fund closures. European hedge-fund giant Brevan Howard Asset Management LLP decided late last year to shutter its commodities fund following heavy losses. That followed a string of closures of entire commodities hedge-fund firms in recent years including Pierre Andurand’s BlueGold Capital Management LLP, later resurrected as Andurand Capital Management LLP, and Clive Capital.
This is the latest blow to Black River, who saw CalPERS withdraw $642 million from their funds late last year.
Photo: Mikael Tigerström