LONDON (HedgeWorld.com)–Global Advisors, a U.K.-based commodities hedge fund operator, has launched two new commodity future funds based on the firm’s proprietary quantitative models. Both funds went live on June 1.
The new funds allow commodities investors to chose or combine a systematic and discretionary portfolio management approach to commodities markets. Market sectors traded include energy, base and precious metals, grains, meats and commodity indices. The minimum investment is $250,000.
The move comes as pension funds and other investors have been diversifying from stock and bond allocations into other asset classes. This has seen Hermes, Britain’s largest pension fund, make commodities its biggest alternative asset allocation. One key benefit commodities are perceived to offer is minimal correlation with traditional asset classes such as equities and bonds.
“Since the cyclical lows in commodity markets that were reached after 9/11, we have seen massive interest develop among institutional investors, mainly in passive long-only index-tracking products,” said Russell Newton, co-principal of Global Advisors said. “Commodities are now being recognized as a mainstream asset class.”
The Global Commodity Systematic Fund offers long/short exposure to the systems as well as diversification within the commodity niche by trading inter-and intra-commodity spreads and outright commodities. Since the system began trading on July 1, 2005, it has racked up a return of 36.4%.
The long/short fund carries an innovative, if pricey, fee structure, which seeks to reward investor loyalty. For investors choosing three month a lock-up, the hedge fund will charge management fees of 3% and performance fees of 25%. For investors prepared to leave their money in the fund for 12 months, the management fee will be cut to 2.25% and the performance fee to 22.5%.
The other new fund is the Global Commodity Index Plus Fund, which offers long-only exposure to the firm’s systematic quantitative models as an overlay onto the long-only portfolio of the Goldman Sachs Commodities Index. The long-only fund will charge an annual management fee of 50 basis points and a performance fee of 25% of any gain in excess of that generated by the GCSI.
Global Advisors has $380 million under management in its Energy and Metals Discretionary fund. It returned 113.1% net of fees from the launch in September 1999 to April 2006.
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