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The AIF Factor

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This year’s AIF Factor was won by Greenland Investment Management; a systematic strategy focusing on global commodity arbitrage opportunities. 

The four other contenders included: Bainbridge Partners, a systematic equity market neutral strategy; Typhon Capital Management, whose Vulcan hedge fund trades market microstructure inefficiencies in metals; Walnut Algorithms, a machine-learning focused investment strategy, and Molinero Capital Management, a fundamental quant commodity programme. 

Anant Jatia, Founder of Greenland Investment Management, founded India’s first onshore hedge fund, Forefront Capital Management, before setting up Greenland Investment Management five years ago.

Greenland’s second fund offering, Greenland Global Fund II, is a carve-out of its existing flagship fund and is set to launch 1st May 2019. 

“While we don’t look to trade physical commodities we look at the divergence from fair value, which is the cost of transportation, and systematically trade as the physical arbitrage takes place,” Jatia said during his presentation. 

The strategy trades 16 such relationships in the portfolio. Where Jatia believes the strategy has an edge is how the team calculates fair value. With links to a family-owned commodity trading business, which has direct contracts with shipping companies, truckers, warehouses and insurance providers, the team is able to develop a proprietary dataset of transportation costs for shipping a commodity from point A to point B. 

The strategy then systematically models the deviations in fair value and builds positions using an in-house, ultra-low latency high frequency trading infrastructure spanning 10 different global locations.

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