Hedge Funds Hammered In Ultra-Volatile Oil Markets

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By Alex Kimani

Hedge funds aren’t exactly batting 1,000 these days. And when it comes to their energy bets, it’s largely been a crash-and-burn story.

This year is threatening to deliver more of the same.

Despite recovering investor risk sentiment, hedge fund managers were in the red for the second consecutive month in September, dragging down their year-to-date return to 5.81 percent and underperforming the global equities market, which gained 2.04 percent over the month.

Since 2016, energy-exposed funds have gotten hammered by wrong-way bets on oil and gas, sparking a wave of closures in 2018. They just can’t seem to get it right, because today’s world isn’t yesterday’s world: Shellshocked on oil for the past few years, now, even things like ominous Middle East tensions that promise to spark WWIII aren’t enough to move the needle on oil for more than a day.

One of the worst hedge fund performances of recent times saw oil hedge-fund manager Pierre Andurand–of the Andurand Commodities Fund–forced to re-strategize and diversify into non-energy sectors after his fund crashed 30 percent in 2018.

To say that energy funds have been a mixed bag this year would be generous.

The price of WTI crude has dropped from more than $75 a barrel in October 2018 to $54.36 at the time of this writing, sending a wintry blast across the energy sector.

So amid the sharp fall in the oil prices that’s negatively impacted returns for many in the space, have any real winners emerged?

Let’s take a look at the performance stats …

Crude Oil

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