CORRECTED-Niche commodity funds beat markets as Jamison doubles assets

Wed Mar 27, 2013 11:16pm EDT

(Corrects fourth paragraph reference to "soft close" instead of "soft call")

* Investors turn to few market-beating macro commodity funds

* Jamison's Koppenberg fund nearly doubles capital in a year

By Barani Krishnan

March 27 (Reuters) - Commodity and macro markets trader Stephen Jamison has closed his macro commodity fund to new investors after nearly doubling its capital to $1.5 billion last year, making it one of the biggest players in that niche market.

Jamison Capital Partners took the action for its Koppenberg Macro Commodity Fund just four years after its launch with $125 million under management, a source familiar with the New York-based company said.

With the fund, Jamison, a former Morgan Stanley trader, mainly invests in commodities, but turns to other assets such as treasuries and equities when he sees better opportunities.

A so-called "soft close" means the Jamison fund is still open to existing investors and differs from a "hard close", where a hedge fund stops accepting cash altogether.

The move comes after the New York-based fund notched up its third straight year of gains in 2012 and increased assets under management by just over $700 million from the start of the year, sources familiar with the fund said.

Hedge funds typically stop raising money when they are adequately capitalized and believe that accepting more cash will not improve returns.

"The Koppenberg fund has capacity to manage up to $2 billion under its strategy," said the source familiar with the fund. "So, it has potential to accept more investments in the future."

Year-to-date, the Koppenberg fund is up 1.2 percent, according to an industry source, after recouping losses in January due to a bad bet on falling oil and copper prices.

Other smaller funds in this niche market have also made a profit in the first two months and have captured investor appetite even as fund-raising across hedge funds remains tough.

Ex-Barclays trader Todd Edgar launched his Atreaus Liquid Global Macro Commodities Fund in middle of last year and doubled his capital to $650 million within seven months, industry sources said. Atreaus is up slightly this year after a 1.2 percent gain in 2012, and is still raising money.

Renee Haugerud, who returned 7 percent at her $600 million Galtere International Master Fund in New York last year, is up about 1 percent this year and remains open to investors, industry sources said.

Spokespeople for Jamison Capital, Galtere and Atreaus declined to comment.

Macro commodity funds are a hybrid of global macro funds -- which trade everything from currencies to stocks based on their view of the world -- and commodity-focused funds devoted to specific or multiple energy, metals and agricultural markets.

IN THE SPOTLIGHT

Year-to-date, the three macro commodity funds are broadly in line with the average gain for the macro fund sector. But they are significantly better off than commodity-only funds which fell 1 percent through February, according to the Newedge Commodity Trading Index.

That may not herald the dawn of a boom for macro commodity funds, but their performance has sharpened investors' focus after a year when many commodity-only hedge funds struggled to raise money or turn a profit.

Directionless commodity markets frustrated both traders and investors expecting a continuation of the speedy price recovery seen in 2009 and 2010 from the financial crisis.

"Obviously, investors shouldn't be looking into the rear-view mirror with commodity funds. But unfortunately, that's what's happening," said Don Steinbrugge, hedge fund consultant at Agecroft Partners in Richmond, Virginia.

By any measure, the macro commodity market is small.

Estimated by industry experts to be worth $10 billion, it is half the size of the commodity-focused fund space run by single managers and based on discretionary trading and a tiny portion of the $2 trillion invested across the hedge fund universe.

Koppenberg's rate of return has slowed dramatically since its stellar 18-percent return in 2010, growing by over 8 percent in 2011 and just 2.7 percent last year. Still, that is well in excess of the broader industry performance.

"A few macro commodity managers have done well, shorting the yen, euro and oil, and going long on S&P stock futures," said Charles Gradante, co-founder of New York's Hennessee Group, which invests with hedge funds. "It's not surprising if investor attention is on them." (Reporting by Barani Krishnan; Editing by Bob Burgdorfer)