The drop came as multibillion-dollar commodities hedge funds such as Blenheim, Clive Capital, BlueGold and Merchant posted double-digit losses for the year.
“For the overall industry 2011 was a bad year, both in terms of performance and of assets under management,” said Christoph Eibl, head of Tiberius, a commodities asset manager.
The Reuters-Jefferies CRB index, a basket of commodities, fell 8.3 per cent during the year, weighed down by falling prices for metals and agricultural raw materials.
Some of the industry’s best-known managers were hardest hit. Blenheim, which has $5bn in assets, posted a loss of about 17 per cent, according to three investors. The fund, founded in 1988 by trader Willem Kooyker, suffered its worst month since inception in September, weighed down by bets on corn and aluminium, an investor said.
Clive Capital, the second-largest commodities fund, run by former Moore Capital trader Chris Levett, lost 10.6 per cent, investors said.
Merchant, founded by ex-Cargill trader Michael Coleman, fared worse, with a 29.9 per cent loss. BlueGold, the hedge fund founded by former Vitol traders Pierre Andurand and Dennis Crema, fell 34 per cent.
Yannix, the agricultural fund founded by ex-Louis Dreyfus trader Bruce Ritter, posted a drop of 5.6 per cent, investors said.
BlackRiver, the asset manager owned by trading house Cargill, posted a 6.8 per cent drop for its main commodities fund, an investor said. Brevan Howard’s commodities hedge fund fell 2.9 per cent.
The hedge funds suffered as commodities prices were hit by external factors, particularly the eurozone debt crisis in September, industry executives said. Erik Serrano Berntsen, at Energy Alpha Strategies in London, said that most commodity funds had had “a tough year… with fundamentals not always in the driving seat”.
But he added: “There have, however, been a few outperforming funds that have benefited from a specialised focus.”
Metals and natural gas specialists both posted strong returns.
Velite, a natural gas fund, gained 51 per cent, while Galena Metals, the fund owned by trading house Trafigura, posted a gain of 11 per cent and Red Kite, a competitor, profited from a bearish view on copper.
Mark Rzepczynski, chief executive of the funds group at FourWinds Capital Management, whose investments include commodity hedge funds, said that sometimes the localised situation looked very attractive for some commodities, but the macro factors swamped those dynamics.
“Traders who were specialists in a given commodity may have been hurt because they didn’t put enough weight on the risk-off trade. They were disadvantaged because they were looking at specific supply and demand factors,” he said.
Industry executives said that investors withdrew money from several large hedge funds as losses mounted. The commodities sector as a whole saw the weakest net inflow of funds since 2002 last year, according to estimates by Barclays Capital. Net flows into commodities totalled $15bn in 2011, less than a quarter of the investment level in 2010, which saw inflows of $67bn, the bank estimates.
The funds named did not comment.