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LONDON—Tufton
Oceanic Ltd., the world’s biggest shipping hedge fund,
aims to expand 40 percent to more than $1 billion by
October.
“The
demand is there from investors,” Andreas Vergottis,
Tufton’s research director, said in an interview in
London
Tuesday. The fund, which manages $740 million, is being
opened again because of growing interest in shipping,
after it was closed to investors last April, Vergottis
said.
The
number of hedge funds dedicated to shipping equities and
futures doubled to four in the past year while commodity
freight rates shot to record highs. Tufton, formed in
2002, is the oldest of the four, which include Clarkson
Plc Shipping Hedge Fund Ltd., M2M Management Ltd., and
Castalia Springs Ltd.
Tufton
exceeded its performance in previous years with a 19
percent return in the past seven months by making “three
big bets,” Vergottis said. It bought into dry-bulk
shipping last June, bought the stocks of
container-shipping companies at the end of last year,
and invested in shipbuilding equities before
first-quarter earnings. At the same time, the fund lost
money betting against the shares of oil-tanker owners,
he said.
Commodity hedge funds returned an average 6 percent in
the first half, according to the 300 funds tracked by
London-based Axiom Fund Management Ltd.
The
market for freight derivatives, used to protect against
or speculate on swings in transportation costs, could
increase to more than $400 billion, Vergottis said. The
market for such contracts was estimated in 2006 at $56
billion by the Baltic Exchange.
“In
other commodities, the paper market is five times as big
as the physical,” Vergottis said. This same “saturation
point” for shipping derivatives would value the market
at more than $400 billion, he said.
Freight
rates for hauling dry-bulk commodities and the shares of
shipping companies have rallied for more than a year.
The Bloomberg Dry Ships Index, which tracks the stocks
of six New York-listed shipping companies, has almost
doubled this year. Hire rates have climbed about 64
percent, according to London’s Baltic Exchange.
(Bloomberg) |
