Thu, 05/01/2017 - 12:18
Liquid real asset specialist firm Cohen & Steers has launched an active commodity fund, offering investors broad and diversified exposure to commodities through an active, long-biased investment approach based on rigorous fundamental research.
The Cohen & Steers Active Commodities Fund is a newly launched sub-fund of an Irish Collective Asset Management Vehicle (ICAV) authorized as a Qualifying Investor Alternative Investment Fund (QIAIF). The fund will maintain exposure to a diversified range of commodities, primarily in global exchange traded futures contracts from all commodity sectors including energy, industrial metals, agriculture, livestock and precious metals.
The fund is managed by Cohen & Steers’ commodities team, led by Benjamin Ross and Nick Koutsoftas, who have an average of 20 years industry experience between them, supported by two dedicated commodities analysts, one commodities portfolio specialist as well as Cohen & Steers’ 41-strong investment team.
Commenting on the launch, Marc Haynes, (pictured) Senior Vice President, EMEA, says: “Commodities offer an attractive long-term total return profile supported by the mega-trend of demand growth from developing countries. We believe the gains experienced in 2016 are part of a broader, sustainable recovery in fundamentals. With most investors still materially underweight the asset class we believe it is an appropriate time to launch an active commodities fund.
“Aside from improving fundamentals, a permanent allocation to commodities can enhance portfolio diversification, provide a hedge against event risk and have a positive sensitivity to periods of unexpected inflation, all of which will be important considerations for investors in the current environment.”
The firm writes that with stock prices near record highs and bond yields near record lows, commodities may offer an opportunity in the current market to unlock value in a depressed asset class. Having hit a 14-year low in January 2016, commodity prices are staging a revival as producers scale back supply, slowly bringing the market back into balance.
Benjamin Ross, Senior Vice President and portfolio manager, says: “After five years of falling commodity prices, many producers are no longer able to operate profitably, with about 70 per cent of commodities trading below their marginal cost of production, causing producers worldwide to reduce output and cut investment in future projects. This supply response is slowly rebalancing the market amid stable global demand growth.
“Our proprietary analysis indicates that most commodities are likely to achieve supply-and demand equilibrium by the end of 2017, with implications for a 25 per cent increase in spot prices from October 2016 levels.
“Economic and policy trends also appear to be shifting in commodities’ favour, including improved global growth, stabilisation in China’s raw materials consumption and the prospect of global fiscal stimulus. But the rebalancing process is often bumpy, underscoring the value of active management in navigating changing market conditions.”
The fund is not yet registered for distribution in any jurisdiction outside of Ireland. Subject to regulatory approval, Cohen & Steers plans to make it available to professional investors in the Netherlands and UK, to qualified institutional buyers in the United States and to qualified investors in Switzerland.
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