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The $6 billion losses in the Amaranth hedge fund have grabbed all the headlines, but the losses in speculative energy trades have not been limited to hedge funds for the rich. Today on Bloomberg:

Mutual fund investors, captivated by oil's 88 percent appreciation in two years, increased their energy holdings in 2006 just in time to lose $4.5 billion.

That's the damage U.S. oil and gas funds recorded as crude plunged 23 percent from a record in July, according to data compiled by Bloomberg. The Guinness Atkinson Global Energy Fund is down 14 percent, and Fidelity Investments' $2.7 billion Select Energy Portfolio has lost 12 percent. The U.S. Global Investors Inc. $1.3 billion Global Resources Fund slid 12 percent...

Declines in these mutual funds are approaching the $6 billion loss at Amaranth Advisors LLC, the Greenwich, Connecticut, hedge fund that bet wrong on natural gas, which has dropped 59 percent this year. Hedge funds are private pools of capital that can only accept money from individuals with more than $1 million because regulators figure they can take more risks than people in mutual funds.

The rich are different -- they have more money. Thus a single hedge fund can lose as much as all the energy mutual funds put together in dollar terms. And hedge funds can use leverage to take more risk, thus it is unlikely that many energy mutual funds have sustained the percentage losses that Ameranth did. But let it never be said that markets aren't democratized, for good and for ill.

Thanks to Donny Baseball for the link.

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