Singapore, while always active in financial markets, is not known as a primary home for hedge funds. However, their first – and only – commodity hedge fund, The Merchant Commodity Fund, has become a major player in the industry. Starting with only $10 Million in 2003, it has recently exploded, by 45 times, to reach $450 Million in 2006. The commodity boom has been the engine driving this fund.
The primary reason for its growth?
After returning over 36% in 2005, it returned almost 50% in 2006. Former Cargill guru, Mike Coleman, well known in the rubber industry, spent 19 years with Cargill, traveling from London to San Francisco to Singapore. As Managing director of Cargill’s Asia Pacific Energy Division, he led the company’s global rubber trading business.
Having called Singapore his home for over 20 years, Coleman has also been a director of the Singapore Commodity Exchange and is the former chairman of the Singapore Chamber of Commerce Rubber Association.
After leaving Cargill and creating U Derivatives, a natural rubber trading firm, in 2001, Coleman founded a fund management firm, Aisling Analytics in 2004, while also creating the now famous, Merchant Commodity Fund. To assist him, Coleman recruited a former valuable colleague, Doug King, to help manage Aisling. It appears all of these moves have achieved success.
After experiencing more normal growth and building the fund to around $47 Million in 2005, The Merchant Commodity Fund exploded in the spring of 2006. The majority of investors to date have been European funds of funds, high net worth individuals, and banks.
Almost one-quarter of the investor group is Asia-based, with the remainder spread around the world. Shares of the fund have recently been trading at over $200, more than twice the price at its beginning. The future will disclose whether the fund can continue its excellent returns and growth.