Soaring natural gas prices boost trend-following hedge fund Drury Capital
The recent surge in natural gas prices is helping to generate eye-catching returns for Drury Capital, the long-running US trend-following hedge fund firm led by former grain trader Bernard Drury.
The firm’s flagship strategy, the Diversified Trend-Following Program, has advanced 30 per cent in 2021, powered both by the recent rebound in commodity prices as well as rising interest rates earlier in the year.
The fund’s investment portfolio is split evenly between financials and commodities in a number of long and short duration instruments. The strategy has made gains in equities indices, as well as long bets in aluminium, natural gas, grains, copper, and selected fixed income trades.
Historic price moves in coffee amid production concerns in Vietnam, which has been hit by Covid-related labour shortages, have also added to performance.
At the same time, Drury’s Multi-Strategy Futures Program, which launched last year, is also up 15.5 per cent year-to-date.
By comparison, the Société Générale Trend-Following Index is up 9.23 per cent over the same period, while another key industry benchmark, the SocGen CTA Index has added 6.5 per cent.
Bernard Drury, founder and CEO of Drury Capital, said every sector traded has proved profitable for the firm this year.
“The early year profits came from trades in rising interest rates, such as bonds and FX, and upward moves in the copper, aluminium and grain markets that were largely pandemic-recovery trades,” he observed, noting the recent “noteworthy” moves in natural gas have helped sustain performance in recent weeks.
“We aim to identify directional opportunities while being disciplined about preserving capital. As well, at times we may provide exposures that investors might otherwise not have.”
Since launching in May 1997, Drury Capital’s Diversified Trend Following Program has generated an annualised rate of return of 9.79 per cent.
“The biggest advantage is the flexibility built into our strategy,” said Bill Miller, Drury’s global head of sales and marketing. “The diversification and detailed analysis by the programme has delivered a strong investment strategy for our investors. The CTA space is now one of the strongest and most compelling narratives available to investors.”