Man starts commodities fund despite fresh investor appetite for complex waning
Man Group will be hoping for a revival in investors’ appetite for fresh commodities allocations, as it launches its first long-only fund dedicated to the sector after a year when allocators cut the amount of new money they gave to the complex by over 70%.
The Ucits compliant Man Commodities fund is exposed to the Man Systematic Commodity Index, a benchmark with 25 liquid futures contracts that include precious and industrial metals, energy and agricultural products, according to Man.
The portfolio has $50m of seed assets, and will aim to outperform passive indices while limiting the risk of losses.
Sandy Rattray, chief investment officer of the Man Systematic Strategies unit that is behind the product, said investors increasingly demanded commodities exposure, but had “relatively few options [available] in a Ucits format.
“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,” he said.
Man’s other main forays into commodity markets – apart from back in 1783, when the company began life as a barrel maker in the sugar business – are via its computer driven AHL fund, which can invest in commodities futures markets, and its Man Commodity Strategies fund of funds.
The underlying investment strategy of the new product is led by Scott Kerson, Man Systematic Strategies’ new head of commodities.
Man will be hoping allocations to commodities investments rebound after fresh assets committed fell by more than 70% last year, according to a report from Barclays Capital.
The investment bank’s annual survey of institutional allocators found almost 60% expect to extend their commodity exposure over the coming three years.
It is little surprise that this is higher than 45% registered in 2011, a year when fresh investments in the sector fell so sharply, to around $15bn from an average of between $50bn and $60bn per annum over the previous three years.