Cohen & Steers has launched an active commodities fund, investing across the commodity sectors including energy, industrial metals, agriculture, livestock and precious metals.
The Cohen & Steers Active Commodities fund is managed by Cohen & Steers’ commodities team, led by Benjamin Ross and Nick Koutsoftas who have have worked together for more than 10 years on an active fundamental commodities strategy.
Ross and Koutsoftas use a research-driven, long-biased approach and mainly invest in in global exchange traded futures contracts. The strategy is a sub-fund of an Irish Collective Asset Management Vehicle (ICAV) authorized as a Qualifying Investor Alternative Investment Fund (QIAIF).
Marc Haynes, 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.”
He adds: “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 has launched the fund to take advantage of the revival in commodity prices, which staged a recovery in 2016 having reached a 14-year low at the start of the year.
Ross 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.”
The fund is currently registered for distribution in Ireland with plans to make it available to professional investors in the UK, subject to regulatory approval.