Morgan Stanley Investment Management has launched the Morgan Stanley Commodities Alpha Fund, an actively managed mutual fund that offers US high net worth investors the opportunity to gain
Morgan Stanley Investment Management has launched the Morgan Stanley Commodities Alpha Fund, an actively managed mutual fund that offers US high net worth investors the opportunity to gain direct access to the potential return and portfolio diversification benefits of the commodities market.
‘The Commodities Alpha Fund gives investors the potential to capture the returns of a global, diverse and growing market that has a low correlation with equity and bond market returns,’ says Justin Simpson, the fund’s lead portfolio manager and global head of Morgan Stanley Investment Management’s quantitative and structured solutions team.
‘For investors seeking to diversify their portfolio, we believe this strategy may be an attractive opportunity for direct, actively-managed exposure to the commodities asset class with the potential for incremental returns.’
The Commodities Alpha Fund seeks to generate the returns of the Dow Jones AIG Commodity Index and to produce incremental returns from an actively managed multi-strategy alpha engine.
The fund pursues continuous exposure to commodities such as agriculture, energy, industrial metals, livestock and precious metals through investment in commodities-linked instruments as well as fixed-income securities, including money market instruments.
It seeks to achieve above-market returns from various proprietary quantitative trading strategies designed to exploit inefficiencies or anomalies in the commodities marketplace, including price curves, price change and volatility.
‘Commodities possess a number of unique properties, including currently favourable supply-demand fundamentals, that have made them an attractive alternative investment opportunity,’ said Chris Callan, the fund’s senior portfolio manager.
‘We believe the combination of limitations on supply and burgeoning demand is supportive of a continued positive outlook for commodity prices. Additionally, a strategic allocation in commodities could also offer a potential hedge against the impacts of inflation, geopolitical risks and macroeconomic downturns.’
The quantitative and structured solutions group brings experience in structuring and analysis of derivatives as well as expertise in research, risk management, trading and technology to the management of structured and quantitative pooled funds and separate accounts investing in commodities, currencies, fixed income and equity markets.
The group, which managed some USD9.6bn in assets for institutional and individual investors at the end of March, launched commodities alpha strategies for European institutional investors in November 2006 and European individual investors last June.
Randy Takian, head of US retail and intermediary business at Morgan Stanley Investment Management, says: ‘Individual investors are increasingly seeking allocations to alternative investment strategies that can provide an added layer of portfolio diversification and the potential for attractive returns.’
Morgan Stanley Investment Management and its investment advisory affiliates have a total of nearly 1,000 investment professionals worldwide and some USD577bn in assets under management or supervision for clients include government bodies, institutions, corporations and individuals at the end of February.
