After deserting commodities markets during last year's slide, some hedge funds are starting to move back in, betting a recent pick-up in energy prices could signal a turning point. A handful of managers are weighing up new specialist hedge funds, industry data shows, while some funds are stepping up exposure to energy markets and oil in particular.
Leading commodities indexes rallied on Friday after the International Energy Agency (IEA) signalled a possible floor in the price of oil which has slumped 65 percent since June 2014, hitting global growth and stocks. "Family offices and institutional investors have started asking us about our positioning in commodities sectors, but mostly focusing on oil," said Samantha Gleave, co-manager on the Liontrust GF European Strategic Equity Fund.
The fund began building positions in energy stocks such as Tullow Oil, Weir Group and Soco International late last year, and has started to increase its commodity exposure through BHP Billiton more generally over the last couple months. Investors resumed consistently allocating money to hedge funds and other strategies focused on commodities in September and have been steadily upping funds since, reaching $1.22 billion in January, the largest allocation since July 2014, eVestment data shows.
A survey of investors published in February by Barclays showed allocations to hedge funds investing in the commodities sector are set to rise 5 percent in 2016. The flurry of interest has encouraged asset managers to raise bullish oil bets for the third week in a row, according to data from the US Commodity Futures Trading Commission, which showed net long positions up 35 percent on the previous week. Two new commodity funds have launched in the first 60 days of 2016, compared with just five launches and 17 fund closures in 2015, data from Preqin showed.
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