TIAA-CREF | October 04, 2010
Acquisition of Premier Agricultural Asset Manager Enhances Offering for Institutional Investors and Extends TIAA’s Leadership in Agricultural Investing
NEW YORK–(BUSINESS WIRE)– Teachers Insurance and Annuity Association of America (TIAA) has acquired a controlling interest in Westchester Group, Inc. (Westchester), one of the nation’s premier, independent agricultural asset managers. The transaction enhances TIAA’s agricultural investment platform for institutional investors and extends its leadership in agricultural investing. Financial terms of the transaction were not disclosed.
“TIAA and Westchester offer a fully integrated agricultural asset management platform that combines a broad global presence with world-class agricultural asset management,” said Scott C. Evans, head of asset management for TIAA-CREF. “Institutional investors will be able to tap TIAA’s expertise and prudent approach to investing and Westchester’s nearly 25 years of experience, on-the-ground presence, local knowledge and attention to quality properties in the U.S. and Australia. We invest in farmland with a long-term view that emphasizes growth through sustainable practices.”
By joining TIAA as a standalone subsidiary, Westchester remains independent and able to exercise its unique expertise and entrepreneurial approach. Randall Pope, Westchester’s president and chief operating officer, will become chief executive officer of the company. Murray Wise, Westchester’s founder and chief executive, will remain a board member and adviser. Westchester’s other investment professionals will continue with the company as well.
“TIAA and Westchester have complementary capabilities and a shared strategic focus on the future of agricultural investing,” said Mr. Pope. “Together, our experience and expertise will enable us to achieve the ownership and investment objectives of institutional clients, as well as attracting new institutional investment capital to the agricultural marketplace.”
TIAA is among the largest institutional investors in agriculture, with investments in more than 400 farms in North America, South America, Australia, and Eastern Europe as part of its General Account. Westchester, which has managed agricultural investments on behalf of TIAA since the inception of TIAA’s agricultural portfolio, manages more than $1 billion in agricultural assets and nearly 320,000 acres throughout the United States and Australia.
“We think the long-term outlook for the agricultural asset class is favorable,” said Jose Minaya, head of TIAA’s Natural Resources Group. “The scale and diversification of our holdings, and now the combined expertise of our company and Westchester will enable us to continue to identify the highest-quality investment opportunities. We also share a long-term view of agricultural investing that emphasizes responsible stewardship of farmland and a risk-managed approach.”
Farmland, with its historically stable returns, differs from other asset types in its market cycles and can potentially reduce volatility relative to a well-diversified portfolio of stocks, bonds and real estate as well as provide a hedge against inflation. TIAA employs a variety of structures in making its farmland investments, with a focus on acquiring equity ownership in the underlying land. The company employs or partners with premier agricultural asset managers to source farmland investment opportunities and then develop and manage the portfolio.
“This transaction shows that companies like Westchester can join TIAA and obtain the benefits of our integrated asset management platform while retaining their independence,” said Sheila Hooda, senior managing director of mergers & acquisitions for TIAA-CREF, who handled the transaction for the company.
Agricultural investments occur within TIAA’s General Account, an insurance company general operating account. The performance of the investments held in the TIAA General Account support the TIAA Traditional Annuity’s guarantees of principal, minimum guaranteed returns, additional amounts and payout obligations. The General Account primarily invests in corporate and government bonds, structured finance instruments, and real estate.
The TIAA General Account is an insurance company account and does not present an investment return, and is not available to investors.
About TIAA-CREF
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization with $410 billion in combined assets under management (as of 6/30/10) and provides retirement services to the nonprofit and government fields.
About Westchester Group, Inc.
Westchester Group, Inc., (www.westchester-group.com), headquartered in Champaign, Illinois, is a leading agricultural asset management firm, providing a complete range of agricultural real estate and management services. The company specializes in portfolio management and acquisition of farmland for institutional and corporate clients, and individual farmers, as well as individual investors. Westchester manages a diverse range of crops for its clients, including corn, soybeans, almonds, wine grapes, apples and citrus.
NEWS - Commodites, Agriculture, Green Investment - NEWS
10/06/2010
Saudis to invest $500 million in Brazil agriculture
Qatar News Agency | Tuesday, 05 October 2010
Sao Paulo: Representatives of Saudi group Agro invest, a public-private agricultural investment company, are now in Brazil seeking partnerships for producing and exporting grain and poultry.
The group’s capital for investing abroad is US$ 500 million. “Brazil has lots of potential. It has good climate and good soil for grain and poultry farming. It is a good country to invest in,” said businessman Mohamed Abdullah Al-Rasheed, the president of Saudi Greenhouses, one of the companies in the Agro invest group.
Agro invest, also known as the International Agriculture and Food Investment Company, was established last year as part of a Saudi government project to ensure food security and help stabilize prices on the local market, according to Brazil-Arab News Agency.
According to Rasheed, activities should begin in 2011, and for such, we must get to know the agricultural opportunities that Brazil has to offer. “We want long-term partnerships,” he added.
Aside from Brazil, the group’s companies are eyeing African, Asian and European countries.
Agro invest’s main fields of interest are poultry, wheat, maize and soy. The group intends to establish several production-oriented partnerships both in Brazil and the Arab country.
As negotiations move forward, Rasheed claimed that the second step is sending a technical team to Brazil to assess the conditions for production and exporting.
Saudi Greenhouses is the leading greenhouse vegetable-growing enterprise in the Arab country.
“I am looking for a partner in melon production for distribution in Saudi Arabia,” said the entrepreneur, who has 74 hectares of greenhouses for growing cucumber, tomato, sweet pepper and eggplant.
The Saudi businessman met on Monday with Brazilian companies in a meeting organized by the Ministry of Agriculture, Livestock and Supply.
On the Brazilian side, the meeting was attended by the Association of Soy Growers of the State of Mato Grosso (Aprosoja), Ricardo Tomoczyk, who met with Saudis and claimed that they will do business for certain.
To the export manager of honey company Novo Mel, Carlos Rehder, and the director of trading company DGA, Gaspar Candioli, who maintain a partnership for selling soy and maize, the meetings were very good.
Both of them spoke with the president of Alsanie Trading, Abdullah Al-Sanie, who is looking for partners in the grain industry, especially soy and maize for animal feed.
The Alsanie group has four companies in Saudi Arabia. In the agricultural field, the group produces poultry and egg, and represents pharmaceutical products for animals, agricultural machinery and auto parts.
The group’s poultry company, Al-Wadi Poultry Farms, has five farms in the country and capacity for slaughtering over 35 million birds per year. Nevertheless, Sanie wants to establish a joint venture with a Brazilian company to produce more chicken and supply the Saudi market.
“The coming of the Saudi delegation was very important. High quality companies and important people have come to negotiate with Brazilian businessmen,” said the director of International Agribusiness Promotion at the Ministry of Agriculture, Eduardo Sampaio.
According to him, the soil, the climate and the abundance of water, coupled with the Brazilian technology and entrepreneurship, have led the country to become the leading producer and exporter of food, attracting investment opportunities.
Aside from purchasing land, Sampaio claimed that it is possible to invest in Brazil in different ways, such as contract farming, financial market mechanisms, stock market or partnerships.
Sao Paulo: Representatives of Saudi group Agro invest, a public-private agricultural investment company, are now in Brazil seeking partnerships for producing and exporting grain and poultry.
The group’s capital for investing abroad is US$ 500 million. “Brazil has lots of potential. It has good climate and good soil for grain and poultry farming. It is a good country to invest in,” said businessman Mohamed Abdullah Al-Rasheed, the president of Saudi Greenhouses, one of the companies in the Agro invest group.
Agro invest, also known as the International Agriculture and Food Investment Company, was established last year as part of a Saudi government project to ensure food security and help stabilize prices on the local market, according to Brazil-Arab News Agency.
According to Rasheed, activities should begin in 2011, and for such, we must get to know the agricultural opportunities that Brazil has to offer. “We want long-term partnerships,” he added.
Aside from Brazil, the group’s companies are eyeing African, Asian and European countries.
Agro invest’s main fields of interest are poultry, wheat, maize and soy. The group intends to establish several production-oriented partnerships both in Brazil and the Arab country.
As negotiations move forward, Rasheed claimed that the second step is sending a technical team to Brazil to assess the conditions for production and exporting.
Saudi Greenhouses is the leading greenhouse vegetable-growing enterprise in the Arab country.
“I am looking for a partner in melon production for distribution in Saudi Arabia,” said the entrepreneur, who has 74 hectares of greenhouses for growing cucumber, tomato, sweet pepper and eggplant.
The Saudi businessman met on Monday with Brazilian companies in a meeting organized by the Ministry of Agriculture, Livestock and Supply.
On the Brazilian side, the meeting was attended by the Association of Soy Growers of the State of Mato Grosso (Aprosoja), Ricardo Tomoczyk, who met with Saudis and claimed that they will do business for certain.
To the export manager of honey company Novo Mel, Carlos Rehder, and the director of trading company DGA, Gaspar Candioli, who maintain a partnership for selling soy and maize, the meetings were very good.
Both of them spoke with the president of Alsanie Trading, Abdullah Al-Sanie, who is looking for partners in the grain industry, especially soy and maize for animal feed.
The Alsanie group has four companies in Saudi Arabia. In the agricultural field, the group produces poultry and egg, and represents pharmaceutical products for animals, agricultural machinery and auto parts.
The group’s poultry company, Al-Wadi Poultry Farms, has five farms in the country and capacity for slaughtering over 35 million birds per year. Nevertheless, Sanie wants to establish a joint venture with a Brazilian company to produce more chicken and supply the Saudi market.
“The coming of the Saudi delegation was very important. High quality companies and important people have come to negotiate with Brazilian businessmen,” said the director of International Agribusiness Promotion at the Ministry of Agriculture, Eduardo Sampaio.
According to him, the soil, the climate and the abundance of water, coupled with the Brazilian technology and entrepreneurship, have led the country to become the leading producer and exporter of food, attracting investment opportunities.
Aside from purchasing land, Sampaio claimed that it is possible to invest in Brazil in different ways, such as contract farming, financial market mechanisms, stock market or partnerships.
Merchant Commodity Fund Swings Into Black In Sept.
Oct 6 2010 | 12:24pm ET
A commodity hedge fund managed by a pair of former Cargill traders is making a bid for a seventh-straight positive year.
The Merchant Commodity Fund erased its year-to-date loss in September, rising 12.7% on the month. The fund is now up 7.5% in 2010, Bloomberg News reports. The $1.1 billion agriculture and energy fund is headed by Michael Coleman, based out of Singapore, and Doug King, who works in Zug, Switzerland.
Merchant Commodity returned 5.2% last year and 24% in 2008.
The average hedge fund returned between 3% and 3.5% last month, according to industry indices. The Standard & Poor's 500 Index rose 8.9% in September
A commodity hedge fund managed by a pair of former Cargill traders is making a bid for a seventh-straight positive year.
The Merchant Commodity Fund erased its year-to-date loss in September, rising 12.7% on the month. The fund is now up 7.5% in 2010, Bloomberg News reports. The $1.1 billion agriculture and energy fund is headed by Michael Coleman, based out of Singapore, and Doug King, who works in Zug, Switzerland.
Merchant Commodity returned 5.2% last year and 24% in 2008.
The average hedge fund returned between 3% and 3.5% last month, according to industry indices. The Standard & Poor's 500 Index rose 8.9% in September
10/04/2010
Les terres rares deviennent une ressource indispensable
Par Nathanael Gabay*
Encore relativement méconnus, ces métaux non ferreux sont bien partis pour être le thème d’investissement des prochaines années.
Les terres rares regroupent, sous ce terme que d’aucuns jugeront inapproprié, 17 métaux non ferreux (dont le scandium, l’yttrium, le lanthane, par exemple) aux propriétés chimiques uniques et non substituables, parmi lesquelles l’amplification des couleurs, la réfrigération magnétique ou l’amélioration de la transmission des lasers. Dans les faits, ces molécules sont devenues indispensables à l’industrie de pointe et aux technologies du futur. On en trouve ainsi dans les écrans LCD et les téléphones portables, mais également dans les ampoules à basse consommation, les voitures électriques et les éoliennes. Les terres rares sont considérées comme une ressource clé dans le développement de l’industrie verte. A titre d’exemple, un véhicule hybride contient entre 15 et 16 kilos de terres rares et une éolienne offshore en nécessite plus de 600 kilos! La technologie militaire se développe également à partir des performances des terres rares. La haute précision des missiles dits «intelligents» a ainsi été possible grâce à la superpuissance des aimants composés de l’alliage samarium-cobalt. Cette dépendance des technologies civiles et militaires à l’égard des terres rares en a fait une ressource stratégique pour toutes les grandes nations industrialisées.
Le contexte économique actuel est particulièrement favorable à une envolée du prix des terres rares. En effet, l’offre actuelle (125 000 tonnes) peine à satisfaire une demande mondiale qui explose (134 000 tonnes, selon les chiffres 2009 de Lynas) et alimente la hausse des prix de la plupart des métaux rares. Ainsi le néodyme, qui est utilisé dans les moteurs hybrides et les éoliennes, a vu son prix multiplié par quatre en deux ans. Mais le principal facteur d’une explosion des prix des terres rares tient à la structure de production extrêmement concentrée. En effet, grâce à une ambitieuse politique d’investissements entamée au milieu des années 80, la Chine s’est constitué un quasi-monopole sur ce marché et fournit actuellement 95% des besoins mondiaux. Cette position dominante permet à la Chine de pousser les prix à la hausse grâce à une politique de restriction des exportations et de taxes à l’export. Et on a vu ces dernières semaines la dimension stratégique des métaux rares. En effet, lors des tensions diplomatiques entre la Chine et le Japon mi-septembre, les terres rares se sont révélé un outil de pression pour Pékin. Menace sérieuse pour l’industrie japonaise lorsqu’on sait que la Toyota Prius et les écrans LCD de Sony ne pourraient exister sans europium et thulium.
Doit-on alors craindre une bulle? Cela semble peu probable car les réserves mondiales de terres rares, estimées à près de 100 millions de tonnes (selon le US Geological Survey) et réparties sur l’ensemble du globe, sont largement suffisantes pour accompagner la progression de la demande. Malgré son leadership actuel, la Chine possède à peine 35% des terres rares extractibles et de nombreux gisements occidentaux ne sont pas exploités. Européens et Américains, principaux transformateurs de métaux rares, semblent donc attendre la montée des prix ou la nécessité de sécuriser leur approvisionnement pour lancer de vastes plans d’investissements miniers sur leur propre territoire.
Dans une situation de frictions entre l’offre et la demande et d’un producteur décidé à faire monter les prix, comment l’investisseur peut-il profiter du potentiel fortement haussier de ce marché? Contrairement à la majorité des métaux précieux tels que l’or ou l’argent, il n’existe pas pour les terres rares de marché à terme organisé tel que le Nymex. De plus, les sociétés spécialisées dans l’extraction de terres rares sont très majoritairement étrangères et non cotées sur les places boursières européennes, ce qui les rend difficiles d’accès pour les investisseurs suisses. Pour y remédier, la société Solactive® a créé un indice thématique sur les entreprises extractrices de terres rares, le Solactive® Rare Earths Performance-Index. Il suit la performance de sept à neuf valeurs parmi une liste d’une quinzaine d’entreprises dont l’activité principale est liée aux terres rares. L’indice est pondéré selon la capitalisation boursière des constituants et rebalancé tous les trimestres afin d’éviter une perte de liquidité due à un rachat ou une fusion. En Suisse, l’indice Solactive® Rare Earths Performance-Index est investissable à travers le Certificat Tracker (ISIN: CH0112278558) émis par EFG Financial Products. Il permet de suivre l’indice tant à la hausse qu’à la baisse et s’adresse donc à des investisseurs avisés en raison du risque de perte en capital. Lancé en juillet 2010, ce certificat a déjà tenu toutes ses promesses avec une progression de 83% en seulement deux mois (au 17 septembre)!
* Conseiller en investissements, EFG Financial Products AG.
Encore relativement méconnus, ces métaux non ferreux sont bien partis pour être le thème d’investissement des prochaines années.
Les terres rares regroupent, sous ce terme que d’aucuns jugeront inapproprié, 17 métaux non ferreux (dont le scandium, l’yttrium, le lanthane, par exemple) aux propriétés chimiques uniques et non substituables, parmi lesquelles l’amplification des couleurs, la réfrigération magnétique ou l’amélioration de la transmission des lasers. Dans les faits, ces molécules sont devenues indispensables à l’industrie de pointe et aux technologies du futur. On en trouve ainsi dans les écrans LCD et les téléphones portables, mais également dans les ampoules à basse consommation, les voitures électriques et les éoliennes. Les terres rares sont considérées comme une ressource clé dans le développement de l’industrie verte. A titre d’exemple, un véhicule hybride contient entre 15 et 16 kilos de terres rares et une éolienne offshore en nécessite plus de 600 kilos! La technologie militaire se développe également à partir des performances des terres rares. La haute précision des missiles dits «intelligents» a ainsi été possible grâce à la superpuissance des aimants composés de l’alliage samarium-cobalt. Cette dépendance des technologies civiles et militaires à l’égard des terres rares en a fait une ressource stratégique pour toutes les grandes nations industrialisées.
Le contexte économique actuel est particulièrement favorable à une envolée du prix des terres rares. En effet, l’offre actuelle (125 000 tonnes) peine à satisfaire une demande mondiale qui explose (134 000 tonnes, selon les chiffres 2009 de Lynas) et alimente la hausse des prix de la plupart des métaux rares. Ainsi le néodyme, qui est utilisé dans les moteurs hybrides et les éoliennes, a vu son prix multiplié par quatre en deux ans. Mais le principal facteur d’une explosion des prix des terres rares tient à la structure de production extrêmement concentrée. En effet, grâce à une ambitieuse politique d’investissements entamée au milieu des années 80, la Chine s’est constitué un quasi-monopole sur ce marché et fournit actuellement 95% des besoins mondiaux. Cette position dominante permet à la Chine de pousser les prix à la hausse grâce à une politique de restriction des exportations et de taxes à l’export. Et on a vu ces dernières semaines la dimension stratégique des métaux rares. En effet, lors des tensions diplomatiques entre la Chine et le Japon mi-septembre, les terres rares se sont révélé un outil de pression pour Pékin. Menace sérieuse pour l’industrie japonaise lorsqu’on sait que la Toyota Prius et les écrans LCD de Sony ne pourraient exister sans europium et thulium.
Doit-on alors craindre une bulle? Cela semble peu probable car les réserves mondiales de terres rares, estimées à près de 100 millions de tonnes (selon le US Geological Survey) et réparties sur l’ensemble du globe, sont largement suffisantes pour accompagner la progression de la demande. Malgré son leadership actuel, la Chine possède à peine 35% des terres rares extractibles et de nombreux gisements occidentaux ne sont pas exploités. Européens et Américains, principaux transformateurs de métaux rares, semblent donc attendre la montée des prix ou la nécessité de sécuriser leur approvisionnement pour lancer de vastes plans d’investissements miniers sur leur propre territoire.
Dans une situation de frictions entre l’offre et la demande et d’un producteur décidé à faire monter les prix, comment l’investisseur peut-il profiter du potentiel fortement haussier de ce marché? Contrairement à la majorité des métaux précieux tels que l’or ou l’argent, il n’existe pas pour les terres rares de marché à terme organisé tel que le Nymex. De plus, les sociétés spécialisées dans l’extraction de terres rares sont très majoritairement étrangères et non cotées sur les places boursières européennes, ce qui les rend difficiles d’accès pour les investisseurs suisses. Pour y remédier, la société Solactive® a créé un indice thématique sur les entreprises extractrices de terres rares, le Solactive® Rare Earths Performance-Index. Il suit la performance de sept à neuf valeurs parmi une liste d’une quinzaine d’entreprises dont l’activité principale est liée aux terres rares. L’indice est pondéré selon la capitalisation boursière des constituants et rebalancé tous les trimestres afin d’éviter une perte de liquidité due à un rachat ou une fusion. En Suisse, l’indice Solactive® Rare Earths Performance-Index est investissable à travers le Certificat Tracker (ISIN: CH0112278558) émis par EFG Financial Products. Il permet de suivre l’indice tant à la hausse qu’à la baisse et s’adresse donc à des investisseurs avisés en raison du risque de perte en capital. Lancé en juillet 2010, ce certificat a déjà tenu toutes ses promesses avec une progression de 83% en seulement deux mois (au 17 septembre)!
* Conseiller en investissements, EFG Financial Products AG.
9/26/2010
Pension fund Calstrs eyes $2.5 billion in commods
NEW YORK (Reuters) - Investment strategists at Calstrs are recommending the No. 2 U.S. pension fund invest up to $2.5 billion in commodities in the next three years, one of the largest institutional allocations planned for the sector.
They also suggest the $132 billion California State Teachers Retirement System not just invest passively in commodity indexes -- as institutional investors have typically done in the past -- but also in actively-managed hedge funds and physical production of raw materials, according to a paper used earlier this month to brief its pensions board.
"Rather than passively investing in commodities, staff advocates a range of active strategies to potentially hedge inflation, profit from commodity price moves up or down and reduce volatility," Calstrs' investment committee staff said in the paper, a copy of which was obtained by Reuters on Thursday.
In a more detailed recommendation to the Calstrs board three months after it voted in favor of a commodities investment, the committee recommended allocating up to 1.5 percent of its assets to commodities over three to five years, rising from below $150 million in the first year to nearly $2.5 billion by the third year.
An investment staff at Calstrs said the board was to be briefed again on the commodities investment plan in October.
"At this point, no decision has been made as yet," the staff said, stressing the plan was still in discussion stage.
The paper presented to Calstrs' board is among the best evidence yet that major institutional investors are still interested in expanding the estimated $300 billion that has been invested in commodity markets over the past decade.
But the approach toward the sector may be changing, as new strategies are sought to maximize returns at a time of highly correlated performance and negative roll returns on futures.
While the first wave of investment years ago had bet commodity markets would offer diversification from equities and bonds, that argument broke down as many markets moved in sync.
The staff recommended that Calstrs adopt a three-pronged strategy comprised of investments in commodity index futures and swaps; hedge funds and trend-following funds; and physical commodity-producing partnerships.
"For example, in the first year of implementation, it is expected that commodities investments would only amount to less than $150 million, but grow to nearly $2.5 billion by the end of Year 3," the said the paper, presented by Calstrs investment staff Carrie Lo and Steven Tong and endorsed by Chief Investment Officer Christopher Ailman.
Calstrs's investment team recommended using the Dow Jones UBS index .DJUBS for the pensions' index futures portfolio, saying it had a more balanced exposure to the different commodity sectors than the energy-dominant SPGSCI .SPGSCI.
Calstrs' foray into commodities is expected to come under its Absolute Return asset class, which targets about 5 percent of the fund's assets, or just under $7 billion.
The investment staff at Calstrs also gave their board the option of having a smaller trial investment of $300 million to $500 million for commodities in a different asset class, although they said they preferred a bigger allocation.
(Reporting by Barani Krishnan; Editing by Alden Bentley)
They also suggest the $132 billion California State Teachers Retirement System not just invest passively in commodity indexes -- as institutional investors have typically done in the past -- but also in actively-managed hedge funds and physical production of raw materials, according to a paper used earlier this month to brief its pensions board.
"Rather than passively investing in commodities, staff advocates a range of active strategies to potentially hedge inflation, profit from commodity price moves up or down and reduce volatility," Calstrs' investment committee staff said in the paper, a copy of which was obtained by Reuters on Thursday.
In a more detailed recommendation to the Calstrs board three months after it voted in favor of a commodities investment, the committee recommended allocating up to 1.5 percent of its assets to commodities over three to five years, rising from below $150 million in the first year to nearly $2.5 billion by the third year.
An investment staff at Calstrs said the board was to be briefed again on the commodities investment plan in October.
"At this point, no decision has been made as yet," the staff said, stressing the plan was still in discussion stage.
The paper presented to Calstrs' board is among the best evidence yet that major institutional investors are still interested in expanding the estimated $300 billion that has been invested in commodity markets over the past decade.
But the approach toward the sector may be changing, as new strategies are sought to maximize returns at a time of highly correlated performance and negative roll returns on futures.
While the first wave of investment years ago had bet commodity markets would offer diversification from equities and bonds, that argument broke down as many markets moved in sync.
The staff recommended that Calstrs adopt a three-pronged strategy comprised of investments in commodity index futures and swaps; hedge funds and trend-following funds; and physical commodity-producing partnerships.
"For example, in the first year of implementation, it is expected that commodities investments would only amount to less than $150 million, but grow to nearly $2.5 billion by the end of Year 3," the said the paper, presented by Calstrs investment staff Carrie Lo and Steven Tong and endorsed by Chief Investment Officer Christopher Ailman.
Calstrs's investment team recommended using the Dow Jones UBS index .DJUBS for the pensions' index futures portfolio, saying it had a more balanced exposure to the different commodity sectors than the energy-dominant SPGSCI .SPGSCI.
Calstrs' foray into commodities is expected to come under its Absolute Return asset class, which targets about 5 percent of the fund's assets, or just under $7 billion.
The investment staff at Calstrs also gave their board the option of having a smaller trial investment of $300 million to $500 million for commodities in a different asset class, although they said they preferred a bigger allocation.
(Reporting by Barani Krishnan; Editing by Alden Bentley)
Credit Suisse commods team leaves to form own fund
NEW YORK (Reuters) - A top Credit Suisse (CSGN.VX) commodity trader is leaving the bank, along with a team of proprietary traders, to set up a hedge fund backed by $150 million from private investment firm Blackstone Group (BX.N), two people familiar with the matter said.
The move by George 'Beau' Taylor, a rainmaker renowned for making big bets on energy markets at a series of Wall Street firms, is the latest response to U.S. lawmakers in July passing new rules cracking down on speculative trading.
Eight people will be leaving the bank, including Taylor, the global head of commodities arbitrage trading, and Trevor Woods, head of energy arbitrage trading.
Credit Suisse and Blackstone declined to comment on the moves, which were first reported by the Wall Street Journal on its website on Thursday.
Investment banks like Credit Suisse with proprietary trading desks are looking a hard look at their trading businesses and whether they comply with the so-called Volcker rule, part of broader financial reforms designed to rein in banks from making risky bets with their own capital.
Credit Suisse's proprietary-trader ranks have thinned from as many as 250 to just 100, a person familiar with the firm told Reuters.
The Volcker rule is widely expected to shake loose a number of trading teams from banks, creating opportunities for investment firms like Blackstone to help launch and take stakes in new hedge funds.
Last month, JPMorgan Chase & Co (JPM.N) told its proprietary commodities traders that their desk will be shut down, as it looks to comply with new U.S. banking laws. Other proprietary desks will also be shut down over time, one source said at the time.
The move by George 'Beau' Taylor, a rainmaker renowned for making big bets on energy markets at a series of Wall Street firms, is the latest response to U.S. lawmakers in July passing new rules cracking down on speculative trading.
Eight people will be leaving the bank, including Taylor, the global head of commodities arbitrage trading, and Trevor Woods, head of energy arbitrage trading.
Credit Suisse and Blackstone declined to comment on the moves, which were first reported by the Wall Street Journal on its website on Thursday.
Investment banks like Credit Suisse with proprietary trading desks are looking a hard look at their trading businesses and whether they comply with the so-called Volcker rule, part of broader financial reforms designed to rein in banks from making risky bets with their own capital.
Credit Suisse's proprietary-trader ranks have thinned from as many as 250 to just 100, a person familiar with the firm told Reuters.
The Volcker rule is widely expected to shake loose a number of trading teams from banks, creating opportunities for investment firms like Blackstone to help launch and take stakes in new hedge funds.
Last month, JPMorgan Chase & Co (JPM.N) told its proprietary commodities traders that their desk will be shut down, as it looks to comply with new U.S. banking laws. Other proprietary desks will also be shut down over time, one source said at the time.
Commodities Outlook Is ‘Constructive,’ Barclays Says
Sept. 23 (Bloomberg) -- Commodities have a “constructive” outlook, with supply constraints set to become a more dominant theme in the fourth quarter, Barclays Capital said.
Demand for coal, aluminum, coffee, copper, crude oil, corn, sugar and soybeans probably will climb to a record this year, analyst Kevin Norrish said today at a presentation in London. The Reuters/Jefferies CRB Index of 19 raw materials is headed for its best performance in the current quarter since last year’s final three months.
“We are pretty positive on commodities for the rest of this year,” Norrish said. “Copper is looking very strong.”
The CRB Index fell in this year’s first six months on concern that the world economic recovery rebound might falter because of slower Chinese growth and budget deficits in Europe. The gauge has added 8.2 percent in the third quarter as gold climbed to a record, cotton rose to the highest price since 1995 and wheat surged.
“The current quarter has proved the strongest for commodity investments so far this year, and we expect further upside price risk in a number of markets heading into the fourth quarter, especially in oil and base metals, but in some agriculture markets as well,” Barclays Capital said in a global outlook report e-mailed today.
Chinese Economy
Raw materials slid in the second quarter as China, the world’s largest consumer of copper, energy and iron ore, took steps to curb its real-estate market. An index of the six main industrial metals traded on the London Metal Exchange dropped 16 percent in the period, the most since the fourth quarter of 2008.
“China’s policy-induced slowdown is showing signs of stabilizing,” Barclays Capital said in the report.
Supply limits will help industrial metals perform well for the rest of 2010, particularly copper and tin, as well as agricultural commodities, Norrish said. He also pointed to demand from emerging markets.
Copper for delivery in three months reached a five-month high on the LME today as inventories monitored by the exchange headed for a 31st weekly decline in a row. The ratio of stocks to consumption probably will fall to an all-time low in 2011’s second quarter, due mainly to Chinese demand, Norrish said.
Copper, Tin
Immediate-delivery copper’s discount to the three-month price, the so-called contango, shrank to $1 a metric ton today, according to LME figures. The spread was at $7.50 in the prior session. A near-term price higher than longer-dated contracts, known as a backwardation, may signal concern about scarcity.
“We are seeing these markets starting to really look quite tight,” Norrish said. “Contangos are starting to tighten up now and are moving into backwardation, which is a classic signal that physical supply and demand is starting to really make an impact.”
The market for tin is “probably as tight as copper,” Norrish said. He predicted an average price for immediate- delivery metal of almost $27,000 a ton in next year’s second quarter. Cash tin traded at $23,645 at 12:55 p.m. in London today. The CRB Index was last up 0.3 percent at 279.77 points.
--With assistance from Claudia Carpenter in London. Editors: Dan Weeks, Claudia Carpenter.
To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.
Demand for coal, aluminum, coffee, copper, crude oil, corn, sugar and soybeans probably will climb to a record this year, analyst Kevin Norrish said today at a presentation in London. The Reuters/Jefferies CRB Index of 19 raw materials is headed for its best performance in the current quarter since last year’s final three months.
“We are pretty positive on commodities for the rest of this year,” Norrish said. “Copper is looking very strong.”
The CRB Index fell in this year’s first six months on concern that the world economic recovery rebound might falter because of slower Chinese growth and budget deficits in Europe. The gauge has added 8.2 percent in the third quarter as gold climbed to a record, cotton rose to the highest price since 1995 and wheat surged.
“The current quarter has proved the strongest for commodity investments so far this year, and we expect further upside price risk in a number of markets heading into the fourth quarter, especially in oil and base metals, but in some agriculture markets as well,” Barclays Capital said in a global outlook report e-mailed today.
Chinese Economy
Raw materials slid in the second quarter as China, the world’s largest consumer of copper, energy and iron ore, took steps to curb its real-estate market. An index of the six main industrial metals traded on the London Metal Exchange dropped 16 percent in the period, the most since the fourth quarter of 2008.
“China’s policy-induced slowdown is showing signs of stabilizing,” Barclays Capital said in the report.
Supply limits will help industrial metals perform well for the rest of 2010, particularly copper and tin, as well as agricultural commodities, Norrish said. He also pointed to demand from emerging markets.
Copper for delivery in three months reached a five-month high on the LME today as inventories monitored by the exchange headed for a 31st weekly decline in a row. The ratio of stocks to consumption probably will fall to an all-time low in 2011’s second quarter, due mainly to Chinese demand, Norrish said.
Copper, Tin
Immediate-delivery copper’s discount to the three-month price, the so-called contango, shrank to $1 a metric ton today, according to LME figures. The spread was at $7.50 in the prior session. A near-term price higher than longer-dated contracts, known as a backwardation, may signal concern about scarcity.
“We are seeing these markets starting to really look quite tight,” Norrish said. “Contangos are starting to tighten up now and are moving into backwardation, which is a classic signal that physical supply and demand is starting to really make an impact.”
The market for tin is “probably as tight as copper,” Norrish said. He predicted an average price for immediate- delivery metal of almost $27,000 a ton in next year’s second quarter. Cash tin traded at $23,645 at 12:55 p.m. in London today. The CRB Index was last up 0.3 percent at 279.77 points.
--With assistance from Claudia Carpenter in London. Editors: Dan Weeks, Claudia Carpenter.
To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.
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