There’s increasing evidence that fallen energy hedge funds are the anomaly and that the sector is still humming along. The latest proof comes from the Energy Hedge Fund Center, which reports that energy-related funds are continuing to grow in size, number and diversity. What is less obvious is where the expansion is coming from. Dr. Gary Vasey, the center’s co-principal, said, “Recent trends suggest more rapid growth of energy commodity funds in Europe, increasing numbers of funds focused on alternative energy and an increase in the number of fund of hedge funds with a high energy component.” According to the center, in Europe there are twice as many energy commodity funds than the equity-focused variety, while in North America, energy commodity focused funds trail energy equity funds 115 to 150. Vasey noted that there are several commodity funds less than two years old that are managing more than $1 billion in assets, and that there’s a trend toward more “exotics” energy funds – such as weather derivatives, catastrophe bonds, carbon and other emissions, uranium and other metals. Peter Fusaro, another center co-principal, added, “We are continuing to see more green hedge funds launch due to interest in alternative energy and global warming issues. We expect this trend to accelerate in 2007.”
