LONDON Red Kite
Groups metals fund posted returns of slightly more than
50 percent in 2013 after switching to a long from a short
position in the copper market around the time prices posted
their lows for the year, sources told AMM sister
publication Metal Bulletin.
The physical metals
fund was up more than 50 percent in 2013, while two other Red
Kite funds also returned double-digit percentage gains, a
source familiar with the matter told Metal
Red Kite bucked the
recent trend of weak returns among commodity funds largely
because of well-timed trades in the copper market, which
returned profits amid a drop in copper prices the first half of
the year and a rally in the second half, other observers of the
After starting the
year with a bearish view of the market, Red Kite began
repositioning the fund in May and June after witnessing a
turnaround in physical copper sales in China, taking a large
long position in outright prices, spreads and physical
The switch largely
coincided with a slump in the copper market that took prices on
the London Metal Exchange to a 2013 low of $6,670 per tonne in
late June, down 19.7 percent from a high of $8,305 per tonne in
February, sources said.
The long position
delivered returns as copper prices rebounded to finish the year
up nearly $700 from 2013 lows, but Red Kite also made strong
returns on physical inventory and spreads as copper premiums
jumped in Asia and the LME forward curve moved into
backwardation, market sources said.
"The Red Kite switch
was definitely up there as one of the big trades of the year;
the volumes were huge," one source active in the copper market
At the time, sell-side
analysts were turning strongly bearish on the copper market,
reacting in part to lagging evidence of a slowdown in demand
that prompted Red Kite to run short positions around the start
of the year, sources said.
"Good data is very
hard to come by in the copper market, and at the time I think a
lot of people were trading looking in the rear-view mirror,"
one observer of the company said.
In slashing their
price forecasts, analysts were also reacting to a huge increase
in mine output during the first half of the year.
The performance of the
funds is likely to boost results for its 2013-14 fiscal year,
which ends March 31.
A version of this
article was first published in AMM sister publication Metal