* Some see upswing running out of steam as China slows

   * Tug of war in oil with Iran, strategic reserve release

   * Precious metals still sought as QE3 seen back on the cards

 By Claire Milhench 

LONDON, April 11 (Reuters) – Commodity managers who performed well in the first quarter with tilts to oil and industrial metals remain bullish going into the second quarter but are prepared for rapid repositioning given the uncertainty around China, Iran and strategic oil reserves. 

Strong U.S. and Chinese economic data at the start of 2012 encouraged some managers to increase their exposure to growth-sensitive commodities, but indicators have been more mixed in April. Managers are also wrestling with how best to position themselves given tensions with Iran over its nuclear programme. 

“An escalation of the situation in Iran would temporarily bring the crude oil price to very high levels but then again eat into the global recovery,” said Mikael Simonsen, chief investment officer at ICECAPITAL Asset Management. This would hit both industrial metals and energy prices.  

The ICECAPITAL Commodity fund rose by almost 10 percent in the first quarter, according to Lipper data, having benefited from an overweight to Brent crude oil futures and an underweight in U.S. crude oil futures.

“This position was clearly geopolitically defensive but still growth positive,” said Simonsen, adding that a positive view on gasoline also contributed to the outperformance.  

“In general we wanted to position ourselves to reflect improving global GDP expectations after the dire sentiment in November 2011.” 

The average actively managed fund in the Lipper Global commodity sector was up 2.3 percent in the first quarter as commodities benefited from an overall increase in risk appetite, but choppy markets created problems for some managers. 

It was a rebound in cyclical commodities that helped the most bullish managers outperform their peers, with energy-tilted funds filling out the top of the Lipper league table. 

Brent crude futures rose 13.4 percent in the first quarter as tensions with Iran escalated and markets fretted about supply disruptions. Meanwhile, New York gasoline RBOB futures were up 27 percent after a series of refinery closures on the U.S. East Coast raised expectations of shortages. 

NIFTY FOOTWORK 

But managers faced a dilemma going into the second quarter as they weighed competing factors that could push the oil price higher or lower, requiring some nifty footwork if they are not to be caught out. 

Benjamin Louvet, manager of the Prim Commodities fund, which was up 7 percent, said he was underweighting the oil sector for the moment after being long gasoil in the first quarter.  

He takes the view that a strategic oil reserves release is likely in the coming weeks. “After this announcement, we will probably raise our allocation to petroleum products,” he said. 

Managers also have to keep an eye on Iranian developments. Simonsen said he was continuing to overweight crude and the short-dated Brent contract in particular. 

“It is difficult to assess probabilities for an Iran scenario, so we would be reactive rather than proactive there.” This would mean cutting the Brent weighting after a potential spike, conditional on a conflict, he said. 

Meanwhile, the mixed data coming out of China, the world’s biggest buyer of many key industrial metals, has taken some of the bullish sentiment out of the market.  

Louvet’s fund benefited from an overweight to copper in the first quarter, and he has retained this going into April, coupled with an overweight to aluminium. However, he is globally underweight base metals, saying supply factors are not supportive. 

Simonsen expects stimulative measures to be taken by the Chinese government, with an easing of the required reserve ratio allowing banks to lend more. “This would bring fresh air under the wings of industrial metals in particular,” he said. 

However, he is ready to reduce the fund’s market directional risk “materially”, as he described it, if he sees hints Chinese growth is close to or lower than the indicated 7.5 percent.  

On the whole, managers remain fairly bullish, with Scott Wolle, lead manager of the Invesco Balanced-Risk Commodity Strategy Fund, saying that commodities still have room to appreciate in the second quarter. 

His fund returned 10.33 percent, boosted by strategic overweights to crude oil and copper.  

“Over the intermediate term, fundamentals look quite good and multiple risk factors – geopolitical risks, weather, and generally loose monetary policy – still tend to favour the asset class,” he said. 

Simonsen also noted that a third round of quantitative easing by the U.S. Federal Reserve would be good for commodities and the precious metals sector in particular.  

This option is in the spotlight again following a disappointing U.S. jobs report last Friday, which has raised doubts about the U.S. recovery.

Once again it was the more systematic-type funds such as Peak Capital Real Assets and the Forward Commodity Long/Short Strategy Fund that found the quarter difficult as choppy markets prevented trend-following and momentum models from performing at their best.

Vattenfall Oy has the second largest electricity distribution network in Finland. Headquartered in Tampere, it serves around 400,000 customers in Southern and Central Finland, and has a 12% market share.

Vattenfall Lämpö Holding Oy operates a broad-based district heating, power generation and gas distribution business in Central and Southern Finland.

“This transaction represents an important step for foreign direct investment into sustainable Finnish infrastructure alongside a local partner” said Ari Lahti, Managing Director and Partner at ICECAPITAL Securities Ltd.

 The total transaction value is approximately €1.54 billion.

ICECAPITAL acted as financial advisor to the consortium jointly with Goldman Sachs International and HSBC.

Additional information:

Ari Lahti, Managing Director, ICECAPITAL Securities Ltd, tel. +358 (0)9 6811 6011
Kimmo Kottila, Partner, ICECAPITAL Securities Ltd, tel. +358 (0)9 6811 6014
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ICECAPITAL is an independent, partnership-owned Nordic investment banking group with activities in corporate finance, asset management and private equity. ICECAPITAL employs some 60 professionals in Finland, Sweden and Denmark.

04/08/2011/REUTERS

By Claire Milhench

LONDON, April 8 (Reuters) – Commodities fund managers who performed well in the first quarter via a tilt to energy are sticking with oil futures in the second quarter but are more cautious on industrial metals as China tries to cap growth.

The ICECapital Commodity Fund LP65011880, which topped a Lipper performance league table of more than 100 actively managed commodity funds, and the Swiss & Global JB Commodity Fund LP65022859, which came seventh, are both favouring energy and gold into the second quarter, with industrial metals seen as more vulnerable to a correction. PIMCO’s $979 million CommoditiesPLUS Strategy fund LP40183159 came second and the hybrid futures and stocks World Commodity Fund LP40113821 came third. “Japan will need to import more industrial metals to help for reconstruction in the region of Tohoku,” said Fabien Weber, manager of the JB Commodity Fund, which was up almost 10 percent in the first quarter. “Nevertheless the surge in demand will not be enough in my opinion to alter the negative impact of China slowing down its imports and so the fund is underweight.”

Mikael Simonsen, chief investment officer of Finland-based ICECapital Asset Management, is also mindful of the fact that demand for industrial metals is very sensitive to global growth. Both managers attributed their strong performance in the first quarter to an overweight in energy versus their benchmarks, particularly Brent oil. This gained a near-record $22 a barrel in the quarter, whilst U.S. crude lagged due to high stockpiles at key delivery point Cushing, Oklahoma. “As there are no easy ways to transfer oil far south from Oklahoma, the Brent contract was the one that had the most upside potential as a hedge against geopolitical unrest,” said Simonsen. The fund used almost half of its risk budget on an overweight to Brent versus U.S. crude, he said.

A survey of investors by Barclays Capital found 28 percent thought crude oil would be the best performer in 2011. Jim Llewellyn, manager of the World Commodity Fund, cited a focus on energy, gold and iron ore as helping performance in the first quarter. “Western Refining was our best performer,” he said. “The industry as a whole was severely depressed coming into the summer of 2010 … Now margins are very healthy.”

HEADWINDS

Weber also highlighted an overweight to corn and underweights to U.S. natural gas and zinc, whilst Simonsen’s fund benefited from tilts to cotton and corn, he said. The oil price has benefited from concerns about supply disruption due to Middle East unrest in the last three months, and both managers are sticking with their energy overweights, but Simonsen is becoming a little more cautious. “Our assessment is that commodities as a group might have some headwinds as we enter the last phase of the cycle,” he said. “It is of course very difficult to call the top of the cycle so we will adapt some dynamic hedging strategies. “He described the outcome for several sectors as “binary” with the energy sector likely to correct if there was a peaceful resolution in the MENA region.

Weber still sees some supportive factors for energy, with Japan needing to import more crude oil and refined products to compensate for the loss of the electricity that was generated by nuclear power following the earthquake last month. The average actively-managed commodity fund in the Lipper Global Commodity sector was up 4.42 percent in the first quarter.

The worst-placed funds were the Loewen IF-Commodities fund, which was down over 5 percent and the Prifund Global Gold and Precious Metals fund, which was down 4.04 percent, according to Lipper data.

Gold and precious metals experienced strong outflows in January and the first half of February as investors developed more risk appetite. Both funds are up on a 12-month basis. (Editing by James Jukwey).

ICECAPITAL Group
ICECAPITAL is an independent Nordic Group specialized in investment banking, asset management and private equity funds. It employs some 70 professionals in Finland, Sweden, Norway and Denmark and its assets under management are 3.4 billion euro. The parent company of ICECAPITAL Group, ICECAPITAL Securities Ltd was founded in 1999.

Further information:
Jyri Viskari, Managing Director, ICECAPITAL Asset Management Ltd, tel. 09 6220 5011

For further information, please contact:
Jyri Viskari, Managing Director, ICECAPITAL Asset Management Ltd, +358 40 548 9272

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ICECAPITAL Group
ICECAPITAL is an independent Nordic Group specialized in investment banking, asset management, private equity funds and brokerage services. It employs some 70 professionals in Finland, Sweden, Norway and Denmark and has assets under management in excess of 3.4 billion euros. The parent company of ICECAPITAL Group, ICECAPITAL Securities Ltd was founded in 1999.

ICECAPITAL Financial Products Ltd will focus on developing and distributing structured products offered by ICECAPITAL Asset Management Ltd to its own client base. Product delivery and issuance is done together with leading international investment banks.

The new company strengthens the product development capabilities of ICECAPITAL Asset Management Ltd, enabling a significant broadening of the product and service offering. Following the broadened capabilities, ICECAPITAL Asset Management Ltd will offer frequent public products with subscription periods as well as customized solutions for bespoke client requirements.

For further information, please contact:
Jyri Viskari, Managing Director, ICECAPITAL Asset Management Ltd, +358 40 548 9272
Niklas Åkerfelt, Managing Director, ICECAPITAL Financial Products Ltd, +358 40 589 6535

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ICECAPITAL Group
ICECAPITAL is an independent Nordic Group specialized in investment banking, asset management, private equity funds and brokerage services. It employs some 70 professionals in Finland, Sweden, Norway and Denmark and has assets under management in excess of 3.4 billion euros. The parent company of ICECAPITAL Group, ICECAPITAL Securities Ltd was founded in 1999.

ICECAPITAL Group

ICECAPITAL is an independent Nordic Group specialized in investment banking, asset management, private equity funds and brokerage services. It employs some 70 professionals in Finland, Sweden and Denmark and its assets under management exceed 3 billion euro. The parent company of ICECAPITAL Group, ICECAPITAL Securities Ltd was founded in 1999. 

Further information

Ari Lahti, Managing Director, ICECAPITAL Securities Ltd, tel. +358 400 601 579
Wisa Majamaa, Managing Director, ICECAPITAL Real Estate Asset Management Ltd, tel. +358 40 826 1001

The Board of ICECAPITAL Real Estate Asset Management Ltd has started the process of selecting Hannu’s successor.

To facilitate further growth we are moving to new bigger premises on 21st of August. Our new office is located at Kluuvikatu 3 (7th floor), where ICECAPITAL Markets, the securities brokerage unit, has already operated since last November. ICECAPITAL Fund Management Company Ltd, ICECAPITAL Life Ltd and ICECAPITAL Real Estate Asset Management Ltd will also be moving into the same premises.

ICECAPITAL Securities Ltd, operating in investment banking, will remain in its current premises at the Book Building (Keskuskatu 1 A).

Our new postal and street address:

Kluuvikatu 3
FI-00100 Helsinki
Finland 
Phone numbers and other contact details will remain as before

ICECAPITAL has established its third private equity housing fund, ICECAPITAL Housing Fund II LP, which invests in rental apartments in Finland. The total capital of the fund, administered by ICECAPITAL Real Estate Asset Management II Ltd and owned by its investors, is some 400 million euro.

The biggest investors are VR Pension Fund, The State Pension Fund, Etera Mutual Pension Insurance Company, Local Insurance Mutual Company, Finnish Cultural Foundation and Cooperative Association Tradeka.
New rental apartments will be constructed in the metropolitan area and other growth centers

The fund invests in new, privately financed or renovated rental apartment buildings in the metropolitan area and in the districts of Tampere, Oulu, Jyväskylä, Turku, Kuopio, Hämeenlinna, Joensuu, Lahti, Lappeenranta, Vaasa and Riihimäki.
 
New rental apartments are constructed in ready planned destinations along with contracts ICECAPITAL Housing Fund II LP has made together with considerable construction companies.

The start-up portfolio of the fund consists of 20 housing companies, totally 1,056 apartments. Some 700 of these apartments are supposed to be built in accordance with a temporary interest subsidy financing model. The value of the start-up portfolio is some 185 million euro. Further investments, along with the fund’s investment strategy, will be made during the following three years.

The private equity housing fund is a good owner considering both investors and tenants

ICECAPITAL Housing Fund II LP enables indirect rental apartment ownership, an effective use of debt financing and gives the opportunity to spread investment portfolio risk.

Considering indirect ownership of rental apartments, where the fund is responsible for rental and administration, investors’ real estate management gets easier. In addition, service and administration of tenants are developed when the fund focuses on these special activities.

”The fund is a safe and persistent renter which strives to ensure that the apartments stay in rental use”, says Hannu Parikka, managing director of ICECAPITAL Real Estate Asset Management Ltd, which is responsible for the administration of the fund. “The demand for rental apartments is growing continuously in the biggest cities and their neighboring municipalities”, Hannu Parikka notes, referring to the success of ICECAPITAL’s first housing fund.

For more information:

Hannu Parikka
managing director, ICECAPITAL Real Estate Asset Management II Ltd, tel. 09-6220 5020

Ari Lahti
managing director, ICECAPITAL Securities Ltd, tel. 0400-601 579

Jyri Viskari
managing director, ICECAPITAL Asset Management Ltd, tel. 09 6220 5011

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ICECAPITAL Group
ICECAPITAL is an independent Nordic Group focusing in investment banking, asset management, private equity and brokerage services. ICECAPITAL employs some 60 professionals in Finland and Sweden and has some 2.8 billion euro assets under management. The parent company of the Group, ICECAPITAL Securities Ltd, is established in 1999.

ICECAPITAL Real Estate Asset Management II Ltd is the administration company of ICECAPITAL Housing Fund II LP and part of the ICECAPITAL Group.

ICECAPITAL Housing Fund I LP 
ICECAPITAL Housing Fund I LP is established in 2006 and is Finland’s first private equity housing fund investing in rental apartments. The fund possesses totally some 1,600 privately financed rental apartments in the metropolitan area and the districts of Jyväskylä, Tampere, Turku, Oulu and Kuopio. The total capital of the fund is 200 million euro.