London-based Armajaro Asset Management lost nearly a quarter of assets at its largest commodities fund in the first quarter, the latest sign that edgy investors have continued to withdraw cash from the sector after weak returns, documents show.
Assets under management at Armajaro Commodities Fund (ACF), the biggest of the group's six hedge funds and one of three dedicated to commodities, fell to $686 million by end-March from $904 million at end-December, documents obtained by Reuters on the fund showed on Wednesday.
Run by John Tinley, a 30-year veteran of commodities trading, ACF invests in grains, precious and base metals, livestock, fibers, energy and softs.
It had a trading loss of nearly 3 percent for the quarter, attributed to crude oil and a few other commodities, according to the documents obtained by Reuters. The company declined to comment on its first quarter results, which are not made public, but the drop of nearly 25 percent in its assets suggests investor redemptions had kicked in as well.
"The commodities hedge fund sector saw redemptions in many funds in 2013," Armajaro Asset Management said in an email to Reuters. "ACF has over a decade-long track record of very strong performance and we are optimistic about asset raising for the fund in the coming months."
Commodity funds had a rough time in 2013 as institutional investors deserted the space to chase a rally in equities.
Funds such as Clive Capital in London and Arbalet Capital in New York closed after months of poor returns. Higgs Capital in London announced in December it was also shutting down and returning capital to investors after facing headwinds in raising money.
Assets under management at Vermillion, the commodity arm of private equity group Carlyle (CG.O), sank more than half to below $1 billion in the nine months to December.
This year, famed oil bull Andy Hall appeared to have redemptions in January as assets at his Connecticut-based Astenbeck Capital fell to $3.5 billion from $4 billion in December. The fund posted a trading loss of 8 percent for 2013.
ACF, launched in 2004, had double-digit gains in four of its first six years, returning a peak of 24 percent in 2009. Its performance has weakened since, with a 7 percent loss in 2011 and gains of less than 2 percent the last two years.
Until the sale of its physical commodity trading arm to Switzerland's Ecom in November, Armajaro was one of the world's biggest dealers in physical cocoa and coffee.
(Reporting by Barani Krishnan; Editing by Tom Brown)