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This week’s fund spotlight is on Unicredit-owned Pioneer Investments and in particular, its commodity newcits: the Pioneer Funds Commodity Alpha A EUR Hedged ND. Managed by Peter Königbauer out of Germany, the Lux-domiciled fund uses a mixture of swaps on commodity futures indices (always 100 per cent invested) along with two-to-six month US Treasury bills. Since October 2009, the fund’s assets have climbed from USD100 million to USD460 million currently. Commodities have been a tough market this year, leaving the fund down -8 per cent on an absolute basis, and a -5 per cent relative basis against the DJ-UBS Commodity Index.


“From our point of view we’re not happy but we understand where it comes from,” explains Königbauer. “The Euro crisis in May and rising wheat prices in July have been difficult periods. We have been underweight grain this year and didn’t expect to see prices climb 40 per cent recently.” As reported in the FT, wheat prices hit a two-year high of EUR236 a tonne last month. But despite this, Commodity Alpha returned +2.5 per cent in August thanks to taking overweight positions in soft commodities and going short on natural gas. The fund’s swaps are focused predominantly on US commodities (energy, agriculture) and UK commodities (energy, metals) using quantitative modelling. “Typically we’re 100 per cent long, 30 per cent short, but this depends on what the model is saying,” says Königbauer, who adds that whilst the fund remains long on base metals, in June it reduced its underweight position on agriculture (and is still underweight). “The Euro crisis has created irrational behaviour in the markets so everyone is playing the agriculture game. The base metals game is more complicated,” says Königbauer. Soc Gen provides custodian and administration services to the fund, with legal handled in-house.  


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