New York-based Vermillion Asset Management was managing about $2
billion in March 2013 but that fell to around $900 million by
December, Carlyle said in regulatory filings to the U.S. Securities
Exchange and Commission.
Carlyle, which acquired Vermillion in October 2012 for an
undisclosed sum, did not say in the latest quarterly filings
released earlier this week what caused the commodities fund to lose
the assets in a relatively short period.
Randy Whitestone, a spokesman for Carlyle, declined to comment on
A December hedge funds report by futures broker Newedge said two
commodity programs at Vermillion posted losses in 2013, and another
eked out modest gains.
Vermillion's Crimson Physical Commodities program lost nearly 7
percent and its Celadon Commodities slipped around 4 percent while
its Viridian program rose 0.7 percent, Newedge's "Nelson Report"
Crimson and Celadon are "long-only" programs that only wager on
higher commodity prices. Viridian is a relative value long/short
program betting on both price gains and drops.
According to the Nelson Report, assets at the Crimson, Celadon and
Viridian programs totaled $533 million as of December.
The report did not include the assets of another Vermillion program
called Seaborne. Seaborne, a shipping fund, managed more than $200
million, industry sources said.
Commodities as an asset class was particularly bearish in the nine
months to December as prices of most basic resources fell and
investors piled cash into rallying equity markets.
Funds with negative or unattractive returns have been especially
prone to redemptions, analysts said.
The Thomson Reuters/Core Commodity Index, which tracks prices across
19 energy, metals and agricultural markets, fell 5 percent last
year. Commodity products, as a whole, saw a record net outflow of
$50 billion in 2013, Citigroup said.
[to top of second column]
"It was not surprising for commodity funds to lose huge sums of
capital during this period, given the stampede from commodities due
to fears of a China slowdown," said Jeffrey Sica, chief investment
officer at New Jersey-based Sica Wealth, which manages more than $1
billion in client assets.
"Investors were chasing record highs on the S&P (stock index),
adding to the dent in commodities."
Carlyle had said in a separate filing in December that it was
preparing to launch a new publicly-traded commodity mutual fund to
capture retail investors. The Carlyle Enhanced Commodity Real Return
Fund would also be run by Vermillion, it said.
This year, commodities have performed more strongly, with the
Thomson Reuters/Core Commodity Index up almost 10 percent after an
energy markets rally powered by brutal winter weather and a run-up
in coffee and livestock driven by supply concerns.
Vermillion, which trades agricultural products, metals, energy and
staples such as coffee, sugar and cocoa beans, was founded in 2005
by Drew Gilbert and Chris Nygaard.
The founding partners have remained co-chief investment officers at
Vermillion after the Carlyle acquisition, managing day-to-day
(Reporting by Barani Krishnan; editing
by Marguerita Choy)
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