NEW YORK (HedgeWorld.com)–Last week Arenberg and Associates Ltd. LLC of Bayville, New York, launched Nostradamus All Gold Funds (NAG II), which promises absolute returns to those interested in allocating to gold. This long/short fund will invest globally in gold mining shares, exchange-traded gold vehicles, options for gold stocks and gold indexes.
Nostradamus All Gold Funds is a Cayman Islands company, and the new fund is listed on the Irish Stock Exchange. A previous gold fund (NAG I) that the same team has been managing since December 2001 will now be closed to new investment. The two funds are not merged because of tax considerations but will run side by side with the same strategy.
Irv Arenberg, a physician, got into asset management after selling a pharmaceutical delivery company that he had founded. He initially ran the gold strategy with family money, having started investing in the gold sector in 1970. A larger asset base will allow him to take advantage of additional trading opportunities, he said.
The fund currently has a long bias. “We’re in the early stages of a secular bull market for gold,” Dr. Arenberg said. The same gold stocks and options strategy generated audited returns of more than 141% in 2002 and as of November returns were 136% for this year.
Due to its concentration in gold, this investment program is subject to high volatility from month to month, however. For example, it had a 30% drawdown in July 2002. But Dr. Arenberg has fine-tuned the options trades and volatility is lower this year. The new approach includes writing puts on stocks that he wants to bring into the core portfolio at below market prices.