An increase in stock market uncertainty post-Brexit and an uptick in interest in commodity hedge funds after a multi-year bear market prompts Reda Bedjaoui, CEO of Redbed Investments LLE and recognized thought leader on multi-sector international investing, to review key characteristics of trading styles in commodity sub-sectors for institutional investors seeking more active opportunities rather than passive strategies.
Hedge Fund Research Institute, HFRI, estimates commodity hedge funds represent less than 1% of total hedge fund industry assets as of 2015.
However, after seeing years of net outflows, 2015 saw modest inflows with several new funds already launched in 2016. In addition, Barclays Annual Investor Survey is projecting a 5% rise in capital into commodity hedge funds this year.
Reda Bedjaoui sees understanding the underlying strategy and style in instruments traded and in sub-sector focus as a way to play relative value relationships and recommends investors look at funds capitalizing on mispricings due to a supply and demand imbalance in the markets traded.
