Sat, Jan 21, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Opalesque Futures Intelligence

Regulators: A US mutual fund that invests in CTAs: What does the regulatory format mean in practice?

Tuesday, November 16, 2010

A Pioneering Mutual Fund
By Chidem Kurdas

US mutual funds with managed futures strategies are a small but growing sector. Some of these funds track indexes, others are actively managed by a commodity trading advisor. MutualHedge Frontier Legends Fund from Equinox - see Inside Talk with manager Richard Bornhoft - is distinctive in offering a portfolio of top-level CTAs to a broader public.

Five well-known CTAs are currently selected for managing portions for the fund (listed in the table). What does the mutual fund regulatory format mean for an investor as a way of getting access to these managers?

----------------------------------------------------------------------

CTA Programs Selected for MutualHedge Frontier Legends, as of Sep 30th

Winton Diversified Program
Tiverton Discretionary Program
QIM Global Program
Beach Horizon - Horizon Program
Cantab - Aristarchus Program

----------------------------------------------------------------------

Here are some key features of Frontier Legends:

  • Minimum initial investment is $2,500 and minimum additional investment is $500.
  • The net expense ratio for Class A shares is 2.20%, including a 1.70% advisory fee.
  • Net asset value for the fund is calculated at the close of regular trading on each day the New York Stock Exchange is open for business.
  • The NAV for a particular day is applicable to all purchases of shares and redemption requests received before the close of trading on the NYSE that day.
  • Securities in the portfolio are valued at the last quoted sales price on the security's primary exchange. Procedures to be followed if market quotes are not available for a security are specified in the fund's prospectus.

The fund has a special structure for investing in CTA programs It will invest up to 25% of its assets in a wholly owned subsidiary. The subsidiary in turn will invest in the selected programs so as to provide aggregate exposure as if 100% of the fund's net assets were invested in the programs.

Mutual funds with alternatives strategies like this one tend to be sold to individuals through financial advisers. Their reach in the American mass affluent market has been limited so far, but the trend is clearly positive.

One of the mutual funds in this sector is Rydex/SGI managed futures, with about $2.1 billion in assets (all share classes combined). But Rydex/SGI managed futures does not invest in CTAs. Rather, its object is to match the daily performance of the S&P Diversified Trends Indicator, using futures, options and other instruments. The performance of a portfolio of top CTAs can be very different from an index like the S&P Diversified Trends Indicator.

Now that the mutual fund regulatory structure has been adapted to managed futures, new products are likely to follow.

Frontier Legends is one of a family of MutualHedge funds managed by Equinox. The others invest in hedge fund strategies like long/short equity and event driven. The MutualHedge fund family was launched at the beginning of this year.



 
This article was published in Opalesque Futures Intelligence.
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - This hedge fund made 37% betting on banks in 2016 and remains bullish after the Trump rally, Hedge fund legend David Einhorn is making a big bet on GM, After impressive 85% return in 2016, hedge fund looks to Canadian gold producer, small banks[more]

    This hedge fund made 37% betting on banks in 2016 and remains bullish after the Trump rally From Forbes.com: Can bank stocks continue to rise after a 28% surge in the KBW Bank Index in 2016, fueled by a post-election rally as stock pickers returned to the beaten down sector? Forget the s

  2. SWFs - China sovereign wealth fund CIC plans more U.S. investments[more]

    From Reuters.com: China Investment Corporation (CIC), the country's sovereign wealth fund, is looking to raise alternative investments in the United States due to low returns in public markets, its chairman said on Monday. CIC will boost its investments in private equity and hedge funds as wel

  3. Some hedge funds strong start in 2017 nice contrast to 2016[more]

    With the 2016 HSBC Hedge Weekly performance rankings in the books - a year in which the same leader-board entries pretty much dominated unchallenged throughout the year - comes a new leader board that is a hard-scrabble mix of hedge fund styles and categories. What is clear after but a few short wee

  4. Macro hedge funds and CTAs outperform in December on strong dollar[more]

    Komfie Manalo, Opalesque Asia: The last month of 2016 saw risk assets climbing higher, as part of expectations that the new U.S. administration will remove barriers to growth and investment, Lyxor Asset Management said. December also saw the Fed hik

  5. Opalesque Exclusive: Roxbury credit events UCITS gathers more assets[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: The Roxbury Credit Events Fund, launched in September 2015, was up 4.24% in 2016, having returned seven positive months during the year. The managers raised