Hedgeweek analysis finds that commodities are once again back in vogue. Tor Andre Svelland, CEO and CIO of Svelland Capital details how the Svelland Global Trading Fund is taking advantage of this shift.
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For Professional clients
Hedgeweek analysis finds that commodities are once again back in vogue. Tor Andre Svelland, CEO and CIO of Svelland Capital details how the Svelland Global Trading Fund is taking advantage of this shift.
What is your background in the commodity markets and how did this lead you to believe you could be successful when investing in this space?
I have traded both physical and paper commodities and freight, and commodity related equities from inside different commodity market players. I spent time at the start of my career working for shipping families such as Klaveness. I also traded for banks and the commodity trader, Trafigura. You learn to understand how each operate in the market, how the physical interacts with the paper, how to manage risk in equities and commodity markets that trade differently. Through my work, I developed an extensive network in the industry with key market participants. With my background I could see there was an opportunity in the market for a player like Svelland Capital.
What is driving the success of your strategy?
We are not generalists. We narrow in on a subset of the commodity market, parts of the energy complex, such as oil and natural gas, metals such as copper, aluminium and iron ore, and the shipping markets. We only trade the markets that we feel we experts in. Our investment process starts with a deep understanding of the physical aspect of the underlying markets and the associated freight component. Freight is often an early indicator. We then look for the best risk reward through a toolbox of instruments that we have at our disposal i) commodity futures, ii) commodity related equities and iii) freight futures.
What is the current opportunity set for the fund?
On a general level, the commodity markets are tight, and this is perhaps somewhat taken for granted by those on the outside. The years between 2002 and 2008 were a China demand story, but now, it is completely different. Now, it is a supply story, and we just don’t have the supply. It is scary in some instances. This has been all too clear in the energy markets, and we are starting to see the same in metals and shipping. There will be volatility in the markets, and we are in the sweet spot to benefit through our insight and our ability to trade and use the volatility to our advantage.
Do you see any standout opportunities in the commodity markets at present?
The copper story looks very good from a supply and demand perspective. We all want greenification, but need copper and the supply is seriously challenged. We have mines being closed due to rioting in South America, regional governments in the region also against further mining and global inventories of the metal down to weeks.
What are your business objectives for Svelland Capital for the year to come?
Our main aim is to continue to generate solid uncorrelated returns for our investors. Last year the fund returned +46.6%. We want to continue to build our investor base and assets. Firm assets under management are now approximately $250 million and we have around 100 investors in the fund (Source: Svelland Capital 17 April 2023).
We can offer bespoke mandates for clients (SMAs) and we are seeing increased interest for commodity futures and options only strategies. Investors find appeal in some of the “off benchmark” commodities we trade such as freight and iron ore futures.
Please note, that an investment into a fund may expose a person accepted as an investor in such fund to a significant risk of losing some or all of the amount invested. The information contained in this document should not be construed as either projections or predictions. Svelland Capital (UK) Ltd makes no representation or warranty, express or implied, except as required by law or in the case of fraud, regarding the accuracy, completeness or adequacy of the information. Past performance cannot be relied on as a guide to future performance.
This marketing communication is intended exclusively for Professional Clients as defined by the UK Financial Conduct Authority (“FCA”) and should not be relied upon by other persons, such as Retail Clients, as defined under the FCA’s Rules. The definitions can be found on the FCA website at www.fca.org.uk. Before making any final investment decisions and to ensure you understand whether this fund is suitable for you, please read the Svelland Capital Investment Guidelines which is available, along with the fund’s Prospectus from our Investor Portal. For distribution within the UK only, Svelland Capital (UK) Ltd is an Appointed Representative of Mirabella Advisers LLP, which is authorized and regulated by the Financial Conduct Authority number 606792.
Tor Andre Svelland, founder and CIO, Svelland Capital – Svelland Capital is a commodities focused investment manager established in 2016. Tor has over 30 year’s experience in the commodities, shipping and equity markets working for companies such as Trafigura, Goldman Sachs and Carnegie.
