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Advantage Commodity Markets


Multi-manager funds seem to be in vogue. JP Morgan AMC recently launched an equity-oriented fund with four fund managers and ING Mutual Fund has taken a walk down the same path. The latter’s multi-manager fund is however a commodity-based one - the ING OptiMix Global Commodities Fund.

Preference for commodity markets over equity markets is another trend that’s on the rise amongst the fund houses. This is largely due to the rising demand and impending growth of the commodity markets, especially in emerging countries. However, there are two sides to this coin as well. Commodity markets have a certain amount of risk associated with them as well. Furthermore, commodity prices are cyclical, going up and down from time to time.

Another risk factor associated with the ING OptiMix Global Commodities Fund is the global currency risk, since the fund will invest in units of global mutual funds which invest in commodity related securities. The chosen sub-funds would also invest in large well-diversified commodity equity funds from the global arena.

Though the sub-fund for the scheme has not been chosen yet, a few probable choices of AMCs worldwide have been listed out, which include Credit Suisse, JP Morgan Asset Management, First State Investment, Martin Currie, Societe Generale Asset Management and Investec Asset Management.

The fund has adopted a multi-manager strategy based on broad diversification to reduce risk and provide consistent and competitive returns over time.

The customized benchmark of the scheme will be the summation of forty per cent Dow Jones World Basic Materials Index, forty per cent Dow Jones World Oil and Gas Index and twenty per cent MSCI AC World.

Scheme Details:
Type: Open-end Fund of Fund
NFO Opens: July 29, 2008
NFO Closes: August 25, 2008
Minimum Application: Rs 5000 and in multiple of Re1/-
Load Structure
Entry Load: For applications below Rs 5 crore, 2.5 per cent will be charged, for applications above Rs 5 crore, no entry load will be charged. Exit Load: Nil