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Shock as commodities hedge fund performs reasonably well

Commodities hedge funds have not being doing well lately. Clive Capital shut its doors last year, so did Higgs Capital, Arbalet Capital and Schroders’ Opus commodities fund. Armajaro Asset Management, the coffee and chocolate specialist hedge fund, has not been without its problems – it biggest fund lost nearly 25% of assets in the first quarter – but it’s actually done surprisingly well.

In accounts posted on Companies House last week, Armajaro Asset Management LLP made a profit of $6.7m for the 12 months to September 2013 in what it describes as “difficult conditions”, compared to $7.9m in 12 months previously. At the end of the period its assets under management were $1.5bn.

Most commodities funds have continued to post weak returns, which has left investors jittery and eager to withdraw their cash. Armajaro’s redemptions shouldn’t come as a surprise, therefore. One of the biggest casualties in the sector last year was Clive Capital, the $5bn commodities focused fund which called it a day after two years of losses in September last year.

Despite the drop in profits, pay has remained fairly stable – and generous – for Armajaro’s partners throughout 2013. Average pay was $772k, compared to $810k per head for the previous 12 months. It has nine partners, down from 10 in 2012.

The highest paid member, presumably its chief executive John Tinley who has been trading commodities for over 30 years, received $6.7m in 2013, compared to $7.9m the year before.

Armajaro doesn’t break out the number of employees outside of the partnership, but said that it spent $6.4m on its staff during the year, compared to $7.5m in 2012. It currently has 27 staff regulated by the Financial Conduct Authority, down from 31 in November last year.

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Credit Suisse commodities reversal and why you mustn’t listen to banks when they say your job’s safe

Citigroup continues to hire for commodities

AUTHORPaul Clarke

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