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Man targets 10% commodity outperformance via new fund
by Alex Plough on Mar 14, 2012 at 12:37
The alternative asset managers Man Group have launched a Ucits commodities fund for retail and institutional investors.
The Man Commodities fund - launched with $50 million in seed assets - aims to outperform the Dow Jones UBS Commodity Index by between 5% and 10% annually.
GLG trader Nick Burnham will manage the fund, which uses a systematic investment approach developed by Man Systematic Strategies.
The underlying strategy has been designed by Sandy Rattray and Scott Kerson, Man Systematic Strategies’ new head of commodities.
It uses liquid, long-only exposure to the Man Systematic Commodity Index, which is based on trading in 25 liquid futures contracts in precious metals, industrial metals, energy and agricultural products.
The fund is also able to have up to 40% invested in cash to limit the downside risk during bear markets.
The minimum investment institutional clients is £100,000 and the annual management charge (AMC) is set at 0.75%, with a 10% outperformance fee if the fund beats its benchmark.
Retail investors must buy in at least £1000 and will be charged a 1.5% AMC and a similar 10% outperformance fee.
‘More investors want to add commodities to their portfolios, but there are relatively few options for them in a Ucits format,' said Rattray, who serves as Man Systematic Strategies’ chief investment officer.
He added: 'Passive investment products like exchange-traded funds and index-linked swaps are generally poor at dealing with severe drawdowns and heightened volatility in commodity bear markets, so we think that an actively-managed, systematic approach is a better solution.’
Rattray, a Citywire Selection pick, currently manages the GLG Esprit Continental Euro fund , which has retuned 72.66% over three years compared to the MSCI Europe ex UK's return of 52.72% over the same period.
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