Singapore-based Olam International, one of the leading trading
companies in the global agriculture commodities sphere, is
moving into the hedge fund arena with a multi-product fund
management platform focused on commodities.
Having built a three-year internal track record, the group
has just opened its maiden offering – a multi-strategy
commodity fund called the Ektimo Commodity Fund – to
external investors. Next in line are a discretionary
agriculture-focused fund and a quant macro offering.
The move is stirring considerable interest in the investor
community, given the Olam group’s strong
institutional backing and deep experience in the commodity
Olam, which earned S$20.85 billion ($16.7 billion) in
revenues in FY2013, is owned 24.1% by Temasek and has been in
the agriculture commodities business since 1989.
"In the early 2000s, Olam decided to leverage its IP to
trading and market-making as well as building a financial
services business," said Ferrell Daste, head of business
development at Invenio Fund Management, a 100%-owned asset
management subsidiary of Olam.
The Ektimo strategy was launched in July 2010 with more than
$50 million in assets from Olam’s internal capital
resources, along with commitments from employees and a
A quantitative-based fund, Ektimo has three main underlying
strategies: relative value (mean reversion), term structure
trading and a trend-following programme.
The strategy is managed by Invenio’s head of
quantitative trading Manvinder Singh and his team. It returned
a solid 10% in 2013, despite challenging conditions in the
commodities space, and is up by some 0.6% this year to
Olam has now opened the fund to external investors, and the
launch is said to be generating good traction with investors.
"The commodities markets are in a state of disarray, but a key
differentiator for us is that half of our portfolio is in
agriculture-related investments – whereas most
commodity funds are energy or metals space-focused. This plays
to our strength," said Daste.
While many commodity funds generally comprise only a handful
of large and concentrated directional bets,
Ektimo’s portfolio consists of a large number of
diversified, smaller positions.
"In short, we run a diversified, quantitative strategy with
no human emotions," added Daste. "Given our target returns of
10-12% with a 10-15% volatility, we easily fit into a lot of
investor buckets. In fact, investors are telling us that we
stabilise their commodity managers’ exposure."
Invenio shares middle office, back office and risk
management resources with its trading group parent, giving it a
ready-made institutional infrastructure platform.