Chicago-based AlphaMetrix has introduced a fund designed to track the performance of Newedge’s AlternativeEdge Short-Term Traders Index.
Chicago-based AlphaMetrix has introduced a fund designed to track the performance of Newedge’s AlternativeEdge Short-Term Traders Index.
The STTI tracker fund, available via the AlphaMetrix Managed Account platform, aims to offer pensions, endowments and accredited investors a low-cost, efficient way to invest in liquid alpha strategies managed by a diverse portfolio of commodity trading advisers.
The AlphaMetrix STTI tracker fund currently has approximately USD70m under management, with additional commitments from large institutional investors expected in the coming months. In January 2009, its first full month, the fund was up 1.94 per cent.
‘Short-term strategies have little to no correlation to any traditional or alternative investments, making them appealing to investors seeking to add pure liquid alpha to their portfolios,’ says AlphaMetrix chief executive Aleks Kins. ‘Further, the Short-Term Traders Index includes a wide range of diversified trading strategies, with each CTA heavily vetted, highly liquid and completely transparent.’
AlphaMetrix says interest in short-term trading strategies is rising because of unease over the lack of liquidity in other alternative investments such as hedge funds, the counterparty guarantee offered by the exchange-traded derivatives market, historically strong risk-adjusted returns, limited downside risk and low volatility.
To be in the AlphaMetrix STTI tracker fund, CTAs must meet the same profile as those in the Newedge index: the programme must have an average holding period of less than ten days; it must be diversified and futures must be their primary investment instrument; and the programme must be open for new investment.
"The index is a highly practical application of our research into the best ways to construct portfolios,’ says Galen Burghardt, head of research for Newedge. ‘We expected short-term futures traders to demonstrate valuable diversifying properties, and we have been very satisfied with the results."
