The growing number of commodity hedge fund disasters won’t put the brakes on what is being called an area of growth for the industry, according to SunGard Data Systems. The trading software manufacturer expects the number of commodity funds to rise 33% in Europe (to 20) and 13% in the U.S. (to 120) by the end of this year, Kiodex unit President Thomas Farley said at a London conference. The past few months have seen the highly-publicized failures of MotherRock and Amaranth Advisors, and Farley said that 80% of U.S.-based commodity funds focus on natural gas trading, just like Amaranth. But Europeans, he said, are likely to offer a wider range of investments to meet the demand from investors seeking both geographic and portfolio diversity. Expect European funds trading in metals, emissions, coal and shipping, according to Farley, but also expect some new offerings from American managers, especially in rubber, cattle and wheat. One thing not to expect: a U.S.-style explosion in the number of commodity funds – from less than 10 three years ago to 106 today – because the continent lacks the talent.
