Allocator interest in commodity hedge funds has nearly doubled over the last two quarters. Luke Sadrian, who launched the Fulcrum Commodities Fund six months ago, thinks the market is still underestimating how much has changed – and why the opportunity may last years, not months.

Something has shifted in how allocators think about commodities. After the better part of a decade on the margins, casualty of a prolonged bear market, a thinning manager universe, and institutional portfolios that had quietly dismantled their commodity exposure as the inflation hedge thesis faded, the asset class is well and truly back in focus.

The Hedgeweek® Q1 2026 allocator survey puts a number on it. The proportion of respondents reporting past allocations to commodity-related hedge funds stood at 33%. Forward intent – where they plan to allocate next – has jumped to 59%. One of the sharpest single-cycle moves in the dataset.

33% → 59%

Shift in allocator forward intent toward commodity hedge funds – Hedgeweek® Q1 2026 Allocator Survey

The question is whether that move is structural or reactive. A genuine reassessment of commodities as a long-term portfolio allocation, or a response to a sequence of disruptive events that may not persist. To explore that, Hedgeweek® sat down with Luke Sadrian, Portfolio Manager of the Fulcrum Commodities Fund and Partner at Fulcrum Asset Management, in his first interview since the fund launched in October 2025.

Sadrian brings three decades of commodity market experience to the role — Goldman Sachs, Brevan Howard, Moore Capital, and most recently as a Partner at Rokos Capital Management. His new fund returned 17.1% in its first quarter (Q4 2025) and is up 13.4% year-to-date through March 2026 bringing inception to date return to 30.5%. The broader strategy, available in SMA structures as well as the fund itself, manages $359m, of which $250m is external capital.

His view, in short, is that the current environment is not a temporary spike in interest. It is the convergence of several independent structural forces that were already building before the Iran conflict began — and that the conflict has, if anything, accelerated.

The strategy

The Fulcrum Commodities Fund is a directional trading strategy concentrated in metals and energy. Between 50% and 80% of risk sits in base metals, precious metals, and platinum group metals at any given time. Add major energy – Brent, WTI, Henry Hub natural gas, TTF, and emissions – and you account for 90 to 95% of the portfolio.

Positions are built when the fund sees a meaningful divergence between its read of supply and demand fundamentals and what the market is pricing, with a catalyst expected within two to four weeks. Options are used extensively to create asymmetric return profiles. The fund never nets short volatility and always knows its maximum downside at both the individual position and overall portfolio level.

What distinguishes the approach from much of the commodity hedge fund peer group, Sadrian argues, is the weight given to macro inputs. “I’d say 50% of my input on supply and demand balances comes from the macro side and 50% from the micro side. I think a lot of my peer group is 90% micro, 10% macro. Because of the firms I’ve worked at — Brevan Howard, Rokos — macro is very much part of my investment process.”

“We put concentrated directional risk into a commodity when we believe we have a different idea of where the supply-demand balance is versus what the market is pricing — and we can see a catalyst in the next two to four weeks.”

The team is deliberately lean. One sub-portfolio manager — Andreas Munz, a battery metals specialist in New York — has been hired. Sadrian expects to add one to three more over the next 18 months but is in no hurry. Majority of the strategy’s AUM currently is held in SMA structures — a reflection, he says, of how efficiently commodity strategies lend themselves to that format. “You can take the whole book off in a day. The risk profile is very simple to understand.”

Oil: A new bull market

The Iran conflict arrived while Sadrian was largely absent from oil. The fund had some natural gas and emissions exposure, but oil was not, in his view, sufficiently interesting to trade directionally. “It was a market in oversupply, but the price reflected that.”

That changed within days of the conflict starting. Long positions were established in the mid-part of the Brent and WTI curves — late 2026 into mid-2027 — before the Straits of Hormuz closed. When the closure came, those positions were increased.

The distinction Sadrian draws from previous geopolitical oil shocks is fundamental. Russia’s invasion of Ukraine never meaningfully reduced global oil production — the barrels were produced, sanctions caused rerouting, prices spiked and eventually normalised. The current conflict is different. Storage facilities inside the Straits of Hormuz are full. Production is being cut. Losses are approaching 300 million barrels and growing by just under 10 million barrels each day.

“Every day that goes by where the Straits remain closed, the equilibrium term price of oil rises by at least 25 cents. The market is seriously underappreciating this.”

His Dec 2026 targets are $95 for WTI and $100 for Brent. The call rests not just on the supply shock itself but on a second-order effect he believes the market is missing entirely. “Once the Straits reopen, it will take 50 to 100 days to get back to 80% of previous oil flow. The shores will need to be secured. There will be convoys. That tail adds further to the equilibrium price.”

March was navigated with a -0.08% monthly return. The fund made money in energy — monetising existing natural gas longs and newly established oil positions – and lost money on gold and silver, where longer-dated positions remain in place. “I found March to be one of the more challenging months of my career,” Sadrian says. “Our strict risk management discipline served us well in extremely turbulent markets.”

Three structural themes

Oil is the most immediate of Sadrian’s current market views, but he is careful to frame it within a broader set of structural forces he believes will define commodity markets for years to come.

The first is the AI and clean energy buildout. Data centre construction has moved from concept to active capital expenditure. Copper is being consumed. Silver is being used in volume. “The capex is actually going into the building now,” he says. “It’s not a concept like it was in 2023 and 2024. This is rubber hitting the road.” The comparison he draws is to China’s growth decade from 2004 to 2012, which drove a broad commodity supercycle. AI infrastructure, he argues, is performing the equivalent role for metals demand today.

The second theme is resource nationalism. The Iran conflict has accelerated a trend that was already building — governments and major industrial consumers moving to secure their own supply of critical minerals. China is the most visible example, but the impulse extends well beyond it. The practical consequence, Sadrian argues, is that historical relationships between visible warehouse stocks and price are breaking down. Copper visible stocks at 4 to 5% would, in previous cycles, have suggested no imminent squeeze. “Against a growing resource nationalism theme, that can make sense,” he says. “The incentive to keep stocks on exchange now reflects a strategic logic rather than a pure market signal.”

“I thought this was going to be mostly a metals bull market. Now, with the Iran conflict possibly pushing oil back into a full bull market, this could be another broad commodities supercycle.”

The third theme is de-dollarisation. Sadrian is measured here — he frames it as a slow-moving second derivative rather than a near-term rupture. “It is very hard for most of the world to partially extract themselves from the dollar system right now. But I believe there will be a growing behaviour acting to reduce dollar exposures over time.” Gold is the fund’s primary expression of this view. The March drawdown — near-simultaneous liquidation from the hedge fund community alongside one-off central bank sales from institutions closely exposed to the conflict — he reads as a clearing event rather than a trend reversal. At the time of writing, gold has recovered to $4,650. His longer-term cycle target is $10,000.

Why allocators are coming back

The 26-percentage-point jump in forward allocation intent in Hedgeweek’s survey did not arrive from nowhere. Sadrian’s own capital-raising experience reflects the same dynamic — $250m in external allocations without a formal marketing effort, drawn in by a combination of track record, the scarcity of credible commodity specialists, and a macro backdrop that has made the asset class genuinely difficult to ignore.

That scarcity is worth dwelling on. The retreat from commodities after 2014 was not just a capital story — it was a talent story. Managers closed. Institutional knowledge dispersed across multi-asset macro funds or left the industry entirely. When the macro backdrop began shifting again — first with energy transition metals, then AI infrastructure demand, and now the most significant oil supply shock in decades — the bench of managers with genuine cycle experience to capture it was considerably thinner than in previous cycles.

“It was almost like a dinosaur age of dying out,” Sadrian says. “The interest is coming back because the markets are more interesting.” He cites the uncorrelated return profile as a key factor — commodity strategies, particularly active directional ones, do not move with equities in predictable or structural ways. Inflation sensitivity adds another dimension. And the capital efficiency of SMA structures makes the entry point more accessible than many allocators may have assumed.

Whether the rotation reflected in the survey data is durable will depend on whether allocators are buying the structural argument – AI metals, resource nationalism, the tightening of stocks-to-use ratios across multiple markets – or primarily reacting to recent performance and geopolitical noise. The honest answer is probably some of both. The structural case does not depend on any single event continuing. The oil story is the most event-driven of the four themes and therefore the most susceptible to reversal. The metals story is not.

The opportunity set

Ask Sadrian to rank the current environment against the three decades he has spent in commodity markets and he does not hesitate.

“Unequivocally, this is one of the best possible times to be in a commodity strategy. You want to be in a directional strategy, not an RV strategy, in this sort of timeframe.”

High volatility, he notes, is generally poor for relative value strategies and good for directional ones. The commodity markets are currently delivering both volatility and a genuine multiplicity of themes — something rarer than the headline noise might suggest. “You’ll have a higher turnover of ideas across the year. There’s a lot more running through the underlying portfolio.”

He is also alert to the ways in which the current cycle is forcing him to update long-held analytical frameworks. Copper visible stocks at 4 to 5% in a bull market would have been unthinkable in previous cycles, where a price explosion required stocks to fall below 1% globally.

“You have to come in every day, take the information you’re given, and assimilate it. You have to tweak your process over time. That’s what makes me find this job as interesting as the first day I started.”

Reporting by Manas Pratap Singh, Head of Hedge Fund Research, Hedgeweek®