The company said the fund offers high-net-worth investors access to the potential return and portfolio diversification benefits of the commodities market and is managed by MSIM’s Quantitative and Structured Solutions investment team.
“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,’ said Justin Simpson, Global Head of the Quantitative and Structured Solutions team and lead portfolio manager. “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 fund seeks to generate the returns of the Dow Jones AIG Commodity Index (DJAIG) and to produce incremental returns from an actively managed, multi-strategy alpha engine, the company said. The fund pursues continuous exposure to the commodities market (such as agriculture, energy, industrial metals, livestock and precious metals) through investments in commodities-linked instruments as well as fixed-income securities, including money market instruments.
The fund will strive for above-market returns from multiple proprietary quantitative trading strategies designed to exploit inefficiencies or anomalies in the commodities marketplace, such as price curves, price change, and volatility, the company said.
“Commodities possess a number of unique properties, including currently favorable supply-demand fundamentals, that have made them an attractive alternative investment opportunity,’ said Chris Callan, Senior Portfolio Manager of the Commodities Alpha Fund. “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 launch of the Morgan Stanley Commodities Alpha Fund for U.S. investors follows the Quantitative and Structured Solutions Group’s launch of commodities alpha strategies for European institutional investors in November 2006 and European individual investors in June 2007.