Schroders is to launch a new investment trust, structured as a Guernsey-domiciled closed-ended investment company, which will invest in a range of commodities strategies.
The Schroder Opus Commodity Fund will be managed by Schroders NewFinance Capital, Schroders’ absolute return multi-manager firm. In addition to the investment through a range of active managers, the fund will also comprise a proprietary commodities futures portfolio managed by Schroders NewFinance Capital.
The fund is aimed at outperforming the DJ-UBS Commodity Total Return Index by 6 to 9 per cent per annum (net of fees) over a cycle, with 100 per cent exposure to the index and a 6 per cent tracking error.
Managing the fund will be David Mooney, who has been with Schroders NewFinance Capital since 2005, when he joined from Merrill Lynch, where he had been responsible for proprietary investments in commodities funds. Cedric Bellanger will act as his deputy with three analysts, along with data management, quantitative research and operational due diligence specialists rounding out the rest of the team. This team at present manages an absolute return and a relative return strategy which amount to some USD2.3 billion in assets (as at end-March).
Commodities products have been coming thick and fast in recent times, driven by the supply constraints which are contributing to the tightness in the commodity markets, and this against a backdrop of continuing global growth – particularly in emerging markets.
“With global economic growth on a sustained track, and concentrated in emerging markets, and with the costs of commodities exploration and production under relentless upward pressure, we are in an extraordinary period for commodities,” Mooney said in a statement.
The annual management fee carried by the fund will be 60 basis points, with a performance fee of 10 per cent on relative benchmark outperformance (subject to an absolute high water mark). The fund is expected to close to investment by the end of June this year.