Global Advisors, a commodity hedge fund manager, said Wednesday it would close two of its three funds due to "poor performance" that prompted investor redemptions, the latest commodity funds to belly up.
London-based Global Advisors, which previously managed about $140 million, said it would close the $60 million Global Advisors Commodity Investment fund and the $5 million Global Commodity Index Plus fund and return money to investors by Sept. 30.
Daniel Masters, a co-founder of the firm, said the funds faced a steady performance erosion over the last 18 months, but said the closings were not due to investment in any one commodity. They specialized in energy and metals investment.
"It's just been a steady drawdown for 18 months," said Masters in a telephone interview from his New York office.
The folding of the funds comes after other commodity funds, notably Amaranth Advisors LP and MotherRock LP, shut down after poor performance in 2006. Both those funds were much larger, however.
The firm is keeping open a third quantitative investment strategy called Global Commodity Systematic that has returned an estimated 15 percent per year for 2005 and 2006. But the strategy erased gains in 2007, leaving it basically flat for the year through August, said Masters.
"August was a bad month for sure," said Masters. The strategy includes both a fund and separately managed accounts.
"We are returning funds to our investors in two of our fund products," the company said in a statement. "Poor performance and external investor redemptions are the reasons for our decision."
Global Advisors also said it is considering expanding its joint venture with IPM Informed Portfolio Management, an investment manager based in Stockholm with some $8 billion in hedge fund assets. It said it may even merge with IPM.
"It's really the quant strategies that are attractive and we and IPM are considering expanding on the original joint venture, which may include partial purchase and merger," Masters added.