Highbridge launches Diversified Commodities Fund

Highbridge Capital Management, the alternatives investment management arm of J.P. Morgan Asset Management, has launched the Highbridge Diversified Commodities Fund offering investors access to commodities futures in a UCITs III format, the first of its kind.

The new SICAV has been launched due to a high level of demand from clients wishing to gain exposure to pure commodities. The actively managed fund will invest in 25-30 of the most liquid, major commodities and will have a long bias but will also have the ability to short commodities should the investment team see an opportunity. The fund will invest in commodities via the futures market and meets the UCITs III rules through the innovative use of a total return swap.

With the level of urbanisation in emerging markets creating a growth in the middle classes, massive infrastructure investment and rising consumer spending is boosting demand for a range  of commodities. For example, demand for fuel in emerging Asia is expected to rise by 87% by 2030, driven by strong growth in the Chinese car market. At the same time, demand for commodities is also rising as more and more developed countries emerge from the global financial crisis.

The fund's management is entrusted to a team of six professionals, who have many years of experience trading in the global financial markets and in the commodities area. It is headed by Sassan Alizadeh and Mark Nodelman. Sassan is an electronic engineer with a PhD in economics. Mark, an economist with an MBA from New York University, has many years' experience in managing investments and was head of quantitative strategy development for commodities at Goldman Sachs.

Jasper Berens, Head of UK Retail Sales at J.P. Morgan Asset Management said: "As the fund gives investors exposure to pure commodities through a total return swap, it means that investors will only be taking commodity risk rather than equity and commodity risk together. While equity sectors overall are generally more correlated to each other and influenced by economic and market trends, the performance of individual commodities tend to be dominated by their own supply and demand dynamics. As a result, diversifying a portfolio of equities, bonds and other alternatives with commodities may offer further diversity within a balanced portfolio."