"Commodity hedge funds face bleak future"

Thus sayeth the FT.
The thing I don't get about these whiny little commod (no 'e', yet) artists is the apparent failure to understand the words hedge or macro.
Dudes, you can go long or short. And do it in multiple, disparate commodities anywhere in the world.

Unless of course the folks who were proclaiming commodities an asset class were simply full of it and were nothing more than longside trend followers charging alpha sized 2-and-20 for what was actually leveraged beta.
From the Financial Times:

 Commodity managers traditionally put most of their capital in oil or copper, but some are doing well in meat

The commodity hedge fund industry is likely to come under greater pressure as weak performance and waning client interest forces major funds to close.

The latest victim of this trend is Clive Capital, once one of the world’s largest commodity hedge funds, which last month announced it would wind down and return $1bn to investors.

This follows the closure of a number of well-known commodity funds over the past two years, including Arbalet, Bluegold, Centaurus and Fortress. 

In a letter to investors, Clive’s management team blamed a complete loss of faith in commodity markets for a lack of returns in the near term. 

They wrote: “We perceive there to be limited suitable opportunities at this point in the economic-demand and the commodity-supply cycles to enable us to utilise our directional, long volatility approach to generate the strong returns of the past. 

“It is also unclear as to when a heightened opportunity environment will return in commodities, although ultimately, it most certainly will.” 

Clive is by no means alone in its suffering: the HFRI Macro Commodity index, which reflects commodity hedge fund returns, posted minus 2.56 per cent returns in 2011, minus 2.57 per cent in 2012 and is down 3.08 per cent for the year to date.

Performance has been blighted by reduced volatility and a lack of large directional moves in commodity markets. This has led to smaller price changes in oil and copper, where commodity managers traditionally put most of their capital. 

These weak returns followed four boom years for commodity funds between 2007 and 2010, which saw many commodity traders swap banking for launching their own hedge fund outfits, and pull in sizeable investments. 

But consistent investor outflows in response to elusive returns are threatening these managers’ business model....MUCH MORE

HT: naked capitalism 

And then you've got the whole high-water-mark thing where managers don't get paid until they've made back the losses, at least to the benchmark point, making it very rational for said manager to decide they would not be working for free, fold the tent and move on to hot snail spa treatments, or whatever the latest fad is.

"Here at L'escargot we believe the outer you should be a reflection of the slimy mollusc that is the inner you..."