By Chanyaporn Chanjaroen – Jun 10, 2010
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Clive Capital LLP’s $3.9 billion commodity hedge fund fell 6 percent in May, the biggest drop since July 2008, mostly because of losses in energy and metals.
Clive Fund Ltd. declined a cumulative 4.2 percent in the first five months of the year, London-based Clive Capital said in a monthly report to investors. The figures relate to Class B shares, introduced in May 2008. The company declined to comment.
“We had clearly become too optimistic as we entered May,” Clive said in the report. “The third week of the month was the most challenging as almost our entire commodity portfolio lost money and our euro positions were of little help.”
Commodity funds declined 1.7 percent on average in May, according to New York-based Hedgefund.net. The Reuters/Jefferies CRB Index of 19 commodities slumped 8.2 percent on concern that Europe’s sovereign debt crisis would curb the region’s economic rebound. Europe consumes about a quarter of the world’s oil and a fifth of the copper, according to BP Plc and Barclays Capital.
The euro weakened 7.4 percent against the dollar in May, the most since January 2009, and the MSCI World Index of equities in 24 developed nations plunged 9.9 percent, the sharpest decline since February 2009.
“The risk reduction was sweeping and thorough, facilitated without any liquidity issues whatsoever, and again was a test to demonstrate that while our book is large, it is liquid and manageable even during periods of stress in the financial markets,” Clive said.
The fund’s Class B shares, which charge investors a 2.5 percent management fee and 25 percent performance fee, returned 15.8 percent last year and 16.1 percent in the months they existed in 2008.
Chris Levett, 40, started the Clive Fund in December 2007 after leaving New York-based Moore Capital Management LLC, where he had spent four years.
Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets and participate substantially in profits from money invested.