Commoditising commodities

Some macro- and multi-strategy hedge fund players are now preparing to launch stand-alone commodity vehicles. What qualities do commodity funds value in a dealer, and how do established funds view their new competitors? By Navroz Patel

Hedge funds' activity in the commodities market is reaching an inflection point. A number of large funds that in recent years dabbled in commodities plan to launch stand-alone commodity investment vehicles by mid-2006, say participants. "Multi-strategy and macro funds, whose allocation to commodities has typically been below 10%, are now ready to give portfolio managers the opportunity to generate