Schroders agriculture fund almost halves in size
Schroders' agriculture fund has almost halved in size over the past six months after negative performance led to significant investor withdrawals on the back of volatile commodities prices.
The fund – which invests in agricultural commodities, such as corn and coffee via exchange-traded funds, swaps, and futures – peaked at $6.4bn (€3.4bn) in size at the end of February, according to the UK asset manager. The fund now stands at $3.8bn.
Over the five months to the end of July, the fund returned -9.7%. However, the fund's size shrank by 42% over the period, meaning that investor outflows in the face of negative performance accounted for most of the fall in size. Because the fund was closed to new investors in February, there have been no investor inflows to balance any outflows from the fund.
Robin Stoakley, managing director of Schroders' UK retail business, said the outflows have been primarily from Asian investors. He also said that some investors have also pulled money out to reduce risk in their portfolios, and some distributors have sold out of the fund after it closed, meaning it had to be removed from their distribution platform.
Schroders added that over the last few months, high food prices have hit the headlines, but not all commodities have risen in price, leading to volatile monthly returns from the agriculture fund. The rise in grain prices led to a fall in returns from livestock, according to a spokesman, while the price of some soft commodities such as coffee had remained relatively flat.
After its launch in October 2006, the fund ballooned in size from $1bn to $2bn between August and December last year. When it reached $3.3bn in mid-January, Schroders announced the decision to restrict investments, and it grew by a further $2.7bn before it fully closed to new investments in late February 2008, at a peak of $6.4bn. The fund raised $640m on its last day before closing, according to Schroders.
There are no plans to reopen the fund, a spokesman said.
-- Write to Phil Craig at pcraig@efinancialnews.com
del.icio.us
Digg
Newsvine
reddit
StumbleUpon
