Long-Term, Risk-Adjusted Total Return
The Commodity Strategy Long/Short Fund allocates to managers who invest both long and short in commodity futures across worldwide markets that are traded on various exchanges and include a wide variety of global futures contracts. Examples include: energy, metals, agriculture, softs (e.g., cotton, sugar, coffee), and livestock.
- The Commodity Strategy Long/Short Fund combines a top-down strategy allocation and a bottom-up manager selection approach. From a top-down perspective, the Fund allocates across three types of strategies: systematic, fundamental and sector specialists.
- The target ranges for the allocations for each type of strategy are set by the investment committee. These allocations are designed to allow the Fund to profit from idiosyncratic return drivers across a wide variety of commodity markets and also provide the potential to profit in either up or down trending price environments.
- The Fund does not attempt to anticipate either inflation or deflation but instead seeks to position itself to have the potential to profit as the environment evolves.
- The variances within the ranges are driven by the bottom-up process of selecting commodity specialists and by the portfolio construction process which takes into consideration risk and return characteristics across the entire Commodity Trading Advisors (CTA) lineup. Manager selection and portfolio construction iterate back and forth to seek the optimal balance of risk control and return potential.
- The combined portfolio allocation attempts to maximize the return while keeping within the pre-specified risk profile and preserving the expected characteristics of a commodity investment, namely generating returns that are uncorrelated to stocks and bonds and providing inflation protection in periods of unanticipated inflation.
Why Consider This Fund?
- Seeks to profit in both up and down trending commodity markets
- Offers additional return sources and diversification to traditional investment portfolios
- Seeks to maintain low or negative correlation to other asset classes
- Takes both long and short positions, giving it the potential to profit in both up and down markets
- Invests in three different styles. By employing specialists in systematic strategies, fundamental strategies and sector specific strategies, the Fund can extract value from a wide variety of opportunities in the commodities markets. Our underlying managers identify price trends, top-down themes, and bottom-up supply and demand changes and attempt to profit from all three types of opportunities. Each of these three strategies requires a distinct skill set.
- Seeks managers that invest only in exchange-cleared commodity futures contracts
The Fund involves a high level of risk and may not be appropriate for everyone. You could lose money by investing in the Fund. There can be no assurance that the Fund’s investment objective will be achieved. The Fund is not a complete investment program and you should only consider the Fund for the alternative portion of your portfolio. Separate accounts managed by the Advisor may invest in the Fund and, therefore, the Advisor at times may have discretionary authority over a significant portion of the assets in the Fund. In such instances, the Advisor’s decision to make changes to or rebalance its clients’ allocations in the separate accounts may substantially impact the Fund’s performance. The Fund is designed for long-term investors.
The Fund may be subject to certain risks directly through investment in individual securities or indirectly through various instruments, including derivative instruments or Underlying Vehicles. The Fund’s commodity investments include derivative instruments that provide exposure to Commodity Trading Advisors (“CTAs”) selected by the Advisor and/or Underlying Vehicles managed by such CTAs. The Advisor currently intends to seek exposure to CTAs through a total return swap (the “Swap”), a type of derivative instrument, based on a customized index designed to replicate the aggregate returns of the trading strategies of CTAs selected by the Advisor.
The Fund may use investment techniques and financial instruments that may be considered aggressive, including but not limited to investments in the Swap and Underlying Vehicles and the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments. Such techniques may also include taking short positions or using other techniques that are intended to provide inverse exposure to a particular market or other asset class, as well as leverage. These techniques may expose the Fund to potentially dramatic changes (losses) in the value of certain of its portfolio holdings.
Risks associated with derivatives may include the risk that the derivative is not well correlated with the commodity, security, index or currency to which it relates, the risk that derivatives may not have the intended effects and may result in losses or missed opportunities, the risk that a counterparty is unwilling or unable to meet its obligations, and the risk that the derivative transaction could expose the Fund to the effects of leverage, which could increase the Fund’s exposure to the market and magnify potential losses. Investing in the commodities markets and investing in commodity-linked derivative instruments, such as futures and swaps, may subject the Fund to greater volatility than investments in traditional securities. Investments are subject to a number of other different types of risk, including market risk, counterparty and contractual default risk, and credit risk. For a more detailed explanation and discussion of these and other risks, please read the Fund’s Prospectus.