| NEW YORK, March 6
NEW YORK, March 6 U.S. private equity group
Carlyle said assets at its commodities hedge fund
Vermillion fell by more than half in the nine months to
December, suggesting investor redemptions at the fund after some
New York-based Vermillion Asset Management was managing
about $2 billion in March 2013 but that fell to around $900
million by December, Carlyle said in regulatory filings to the
U.S. Securities Exchange and Commission.
Carlyle, which acquired Vermillion in October 2012 for an
undisclosed sum, did not say in the latest quarterly filings
released earlier this week what caused the commodities fund to
lose the assets in a relatively short period.
Randy Whitestone, a spokesman for Carlyle, declined to
comment on the situation.
A December hedge funds report by futures broker Newedge said
two commodity programs at Vermillion posted losses in 2013, and
another eked out modest gains.
Vermillion's Crimson Physical Commodities program lost
nearly 7 percent and its Celadon Commodities slipped around 4
percent while its Viridian program rose 0.7 percent, Newedge's
"Nelson Report" said.
Crimson and Celadon are "long-only" programs that only wager
on higher commodity prices. Viridian is a relative value
long/short program betting on both price gains and drops.
According to the Nelson Report, assets at the Crimson,
Celadon and Viridian programs totaled $533 million as of
The report did not include the assets of another Vermillion
program called Seaborne. Seaborne, a shipping fund, managed more
than $200 million, industry sources said.
Commodities as an asset class was particularly bearish in
the nine months to December as prices of most basic resources
fell and investors piled cash into rallying equity markets.
Funds with negative or unattractive returns have been
especially prone to redemptions, analysts said.
The Thomson Reuters/Core Commodity Index, which
tracks prices across 19 energy, metals and agricultural markets,
fell 5 percent last year. Commodity products, as a whole, saw a
record net outflow of $50 billion in 2013, Citigroup said.
"It was not surprising for commodity funds to lose huge sums
of capital during this period, given the stampede from
commodities due to fears of a China slowdown," said Jeffrey
Sica, chief investment officer at New Jersey-based Sica Wealth,
which manages more than $1 billion in client assets.
"Investors were chasing record highs on the S&P (stock
index), adding to the dent in commodities."
Carlyle had said in a separate filing in December that it
was preparing to launch a new publicly-traded commodity mutual
fund to capture retail investors. The Carlyle Enhanced Commodity
Real Return Fund would also be run by Vermillion, it said.
This year, commodities have performed more strongly, with
the Thomson Reuters/Core Commodity Index up almost 10 percent
after an energy markets rally powered by brutal winter weather
and a run-up in coffee and livestock driven by supply concerns.
Vermillion, which trades agricultural products, metals,
energy and staples such as coffee, sugar and cocoa beans, was
founded in 2005 by Drew Gilbert and Chris Nygaard.
The founding partners have remained co-chief investment
officers at Vermillion after the Carlyle acquisition, managing