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Lionel Semonin: «Earth Element is a commodity fund using long-short strategies! »

Ex-BNP Paribas and former head of JP Morgan’s Commodity Investor Solutions, Lionel Semonin has launched Four Elements Captial, an asset management firm with a focus on commodity markets.

Article also available in : English EN | français FR

Can you please introduce your firm, Four Elements Capital?

Four Elements Capital is a Singapore-based specialized commodity asset management company. I created the company in 2008, after holding executive positions at BNP Paribas in London and JP Morgan as head of Commodity Investor Solutions. The management team gathers nine professionals with significant experience in the commodity field but also in designing and implementing quantitative models within the commodity asset class.

To build our portfolio, our model continuously monitors a set of thirty commodity markets
Lionel Semonin

What is Four Elements Capital’s investment philosophy? How do you distinguish yourself from the competition?

Our management strategy is to invest in commodities using a systematic approach, that is to say using buy / sell signals generated by a quantitative model, outcome of years of research. To build our portfolio, our model continuously monitors a set of thirty commodity markets. These markets are selected based on their liquidity and they cover almost the entire commodity market, including energy, metals and agricultural products. Relative to competing funds, we do have an innovative approach as our quantitative model does not rely on price analysis - as usually the case - but on each market’s fundamentals within our investment universe. This model uses numerous analytical criteria such as global inventory level or even the costs of production. Our decision to buy, sell or remain neutral on a specific market is given by the analysis of these types of data.

Relative to competing funds, we do have an innovative approach as our quantitative model does not rely on price analysis but but on each market's fundamentals within our investment universe!
Lionel Semonin

What is your product offer ?

Our flagship product is the Earth Element Fund whose characteristic is to take both long and short positions.

It is a kind of "Long-Short Equity" strategy applied to commodity markets. It targets annual returns of 20% with volatility less than 15% while limiting the leverage to 2.

It is important to note that this product is currently not yet open to investors as it is still in the process of building a track record. Indeed, the fund has been launched recently.

What are your forecasts on commodity markets in 2010?

If the prospects for global economic growth are confirmed in the coming months, we believe the commodities’ market prices should rise in 2010. The most sensitive products to economic cycles should widely benefit from the recovery, especially base metals. We are also positive on agricultural markets and especially palm oil. Mainly used for food, we currently see a very strong demand in Asia, especially in China, due to a price lower than that of soybean oil.

RF , December 2009

Article also available in : English EN | français FR

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