Hedge Funds Pull Back From Commodities

Apr 16 2014 | 2:30pm ET

Two years after calling for limits on hedge funds’ role in the commodities markets, a pair of United Nations economists say that hedge funds are limiting themselves.

David Bicchetti and Nicolas Maystre of the UN Conference of Trade and Development said that the latest data shows banks and hedge funds are playing a smaller role in commodities markets since 2008. “As financial investors including banks and hedge funds have reduced their activity in commodities markets in the last two years, we’ve seen a marked drop in the correlation between the returns on the equity markets and the returns on oil and other commodities futures markets,” Bicchetti told Reuters.

Still, he and his colleague believe that further regulations are necessary to ensure that things stay that way, keeping volatility in check and commodity prices more linked to supply-and-demand.

“High levels of speculative activity have made commodity markets less stable than they used to be, and there is still an argument for greater regulation and potentially intervention in times of heightened market activity,” Maystre said.

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…