Rockville, Md.-based Rydex Investments says it has launched a fund of funds with exposure to the alternatives marketplace. According to the company, which has some $15 billion of assets under management, the Rydex Alternative Strategies Allocation Fund seeks to deliver returns with a low correlation to those of traditional stock and bond asset classes, as well as to provide capital appreciation.
“From hedge fund replication to the industry’s first managed futures mutual fund, Rydex has been a leader in bringing alternative investments to financial professionals and their clients,” says Kevin McGovern, managing director of Rydex mutual funds. McGovern adds that the new Rydex fund can help do the “heavy lifting” for investors who are uncertain about how many and which types of alternatives to incorporate into their portfolios.
The new Rydex fund invests in a suite of alternative mutual funds and ETFs, including other Rydex funds, to provide exposure to alternative asset classes and investment strategies such as absolute returns, commodities, currency arbitrage, managed futures and real estate. The fund uses a quantitative investment methodology in an attempt to emphasize the most favorable alternative asset classes and investment strategies at any given point in time, explains the company.
“Until recently, individual investors have had difficulty gaining access to alternative investments due to high minimum requirements, lack of liquidity and other barriers,” says Edward Egilinsky, managing director of alternative investments for Rydex. “By packaging alternative exposures within mutual fund product structures, Rydex has been able to deliver the potential benefits of alternatives to individual investors in a retail-friendly format.”
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Rydex also says that assets in the industry’s first mutual fund providing managed futures exposure, launched in March 2007, total $400 million, including more than $150 million since the beginning of January 2008. The Rydex Managed Futures Strategy Fund is designed to provide convenient and cost-effective access to the U.S. commodity and global financial futures markets by aiming to mirror the daily performance of the Standard & Poor’s Diversified Trends Indicator, less any fees and transaction costs.