Reuters – Commodity hedge funds may have a harder time finding investors as prices of raw materials yo-yo after months of gains, but they remain the best bet for extraordinary profits, an industryexecutive said this week.
“There’s no other sector that’s done better than commodity hedge funds in the last two years,” John D’Agostino, chief operating officer at MotherRock, a New York energy hedge fund, told Reuters in an interview.
“You’re going to have ups and downs in this market, no doubt,” said D’Agostino, a former vice-president for strategy at the New York Mercantile Exchange, who co-founded MotherRock with ex-NYMEX president J. Robert “Bo” Collins.
“Even the most brilliant traders with best risk management are going to pick the wrong side occasionally, get caught and have significant short-term losses. But good traders, over the course of a quarter or a year, will have the ability to make out-sized returns because the volatility is there.”
Hedge funds work to return “alpha,” or gains beyond market expectations, by devising actively managed portfolios that include commodities and other financial instruments for wealthy individuals and those willing to take high investment risks.
