Hamburg, Germany-based Aquila Capital Concepts, a $1.8 billion hedge fund shop, last month launched a hedge fund focused on the shipping sector and is readying another fund focused on trading carbon emissions for November.
The Okeanos Shipping Fund set sail on Aug. 1 and invests in shipping derivatives and vessel time chartering, according to fund documents.
The Cayman Islands-domiciled fund’s primary strategy will employ directional trading of forward freight agreements, with an emphasis on short-term trading. Its holding periods will range from intra-day to two weeks on the short-term book, and up to several months on the medium and long-term books. The fund will also trading spreads between various freight contracts of the same or different time horizons.
According to the firm, shipping derivatives are an inefficient emerging asset class with annual revenues of US$500 billion. The shipping industry is expected to grow at least 5% with increased Asian demand in recent years. It is also a relationships-dominated industry, “with participants having typically known each other for many years both professionally and personally.”
“With 80% of contracts being conducted over-the-counter, it is difficult for outsiders, such as purely financial players, to use their knowledge in derivatives trading to enter this specific market and to trade efficiently.”
Enter HF Navigator, the German-based freight consultant that will act as an investment advisor to the fund. “HF Navigator has a unique advantage others in that they maintain a presence in the underlying market of shipping derivatives, through ship chartering and cargo booking for their clients. This affords them a direct view into the market developments that move the primary index,” the firm said.
The fund charges 2% for management and 20% for performance, with a US$500,000 minimum investment requirement.
In addition, Aquila is also expanding its reach into the clean technology space with the launch of its Carbon Opportunity Fund in November. It will employ both arbitrage and directional trading strategies.
“CO2 credits are a new asset class with no correlation to other classes, and low correlation to other energy markets,” the firm said. “The market saw real growth in activity only in January 2005, when the EU began its cap-and-trade scheme, effectively forcing energy producers as well as large CO2-emmitting industries to enter. Since then, the market for CO2 credits has grown rapidly. Now we have the beginnings of participation in CO2 emissions credit issuance and trading outside of Europe, in the U.S., specifically in the West Coast (West Coast Initiative) and North-Eastern and Mid-Atlantic States (Regional Greenhouse Gas Initiative).
3C Consulting, an advisory firm in the global carbon market, will serve as the fund’s investment advisor.
The CO2 fund also charges 2% and 20% with a $500,000 minimum investment requirement.