--Hillary Jackson
Security Global Investors has launched a new long/short commodities fund and is considering future funds in distressed debt, long/short real estate, private equity and clean technologies. In conjunction with the fund development, the firm is preparing a new Web campaign to educate investors about alternative investments, Richard Goldman, president of the firm, told AIN sister publication Fund Action. “We’re in execution mode,” he said of SGI’s strategy following its recent integration with Rydex Investments.
“I think there’s an insatiable thirst to move away from pure style boxes and look for ways in which investments can find the balance between maximum returns while protecting principal and managing risk—especially downside risk,” Goldman said, maintaining many investors are dissatisfied with their existing asset allocations. “In this particular case, we believe in the area of commodities there’s an opportunity to come out with new products.”
The Rydex SGI Long/Short Commodities Fund launched on June 25 and tracks the JPMorgan Core Commodity-Investable Global Asset Rotator Sigma Long-Short Total Return Index, or C-IGAR Sigma Index. It has an expense ratio of 206 basis points.
Sanjay Yodh, managing director of alternative strategies, told FA the fund is unique because of its risk management measures and its “active indexing” methodology, which allows for the portfolio to be managed on a component—rather than a sector—level.
“If we identify on a one- or three-month basis that volatility is above 20% using standard deviation as the benchmark, we reduce exposures to get it under 20%,” Yodh said, explaining SGI wanted to be able to hedge exposure to commodities at any given time due to geopolitical or other circumstances.
The C-IGAR Sigma Index comprises 14 constituents, including various energy-related commodities, soft commodities such as corn, wheat and soybeans, and metals, including gold and silver. “This portfolio can be net long, net short or all in cash, based on if the criteria suggest it should be that way,” he said. “We wanted to create a product we thought was risk-appropriate and complementary to the Rydex/SGI Managed Futures Strategy Fund. The beauty of this strategy in mutual fund format is this is a very appealing option for any investor who wants exposure to commodities.” Yodh said SGI aims to launch a new fund every four to eight months. “I would hope we would launch one more this year, but I can't guarantee that,” he said.
This article was originally published in Alternative Investment News.