Global Advisors, the commodities hedge fund manager, says that the Global Advisors Discretionary Program, its core investment programme, has returned +30% * net of fees for investors in 2004.
Commenting on the performance, Danny Masters, portfolio manager of the program, said: “2004 has seen massive inflows of capital into commodities due to three main factors: demand, depletion and the dollar. Oil was the best example. Demand for oil rose at an unprecedented pace led by Far Eastern and US growth. Depletion of mature oil and natural gas fields meant we had to find new sources of energy to meet increasing demand. Finally, the weak dollar served to exacerbate demand for commodities when expressed in foreign currency.
To some extent, each of these factors have now lost some of their potency: demand growth seems likely to moderate as a result of continued high prices; high prices for “forward” have encouraged producers to maximise production and raised exploration investment; and finally, the dollar’s downward spiral seems to have slowed, if not stopped. We therefore do not expect to see the same kind of price moves in industrial commodities in 2005 that we saw in 2004. However, we believe that opportunities in energy & metals markets will remain abundant in coming months.
We are delighted with this performance which was achieved on very low volatility — we experienced only two losing months during the year, and the largest drawdown was less than 2.0%. Our assets under management increased from $109m to $280m over that period.”
The Global Advisors Discretionary Program uses a diversified strategy that focuses uniquely on two commodity complexes: energy and metals. Global Advisors’ approach combines both technical and fundamental analysis as well as proprietary technology and in-the-trenches trading expertise.
The Global Advisors Discretionary Program currently manages $280m of assets for institutional investors, professional investors, funds of hedge funds, and family offices. The Discretionary Program started trading in September 1999 and has returned 120% (net of fees since inception).
* Global Advisors Discretionary Programme: Actual returns to 30th November 2004 and estimate for the month of December 2004.