The commodities in the basket include oil and industrial metals.
Liontamer’s head of investment solutions Janine Starks says the fund is a unique and low risk way for investors to get exposure to commodities.
“In the past the volatility of commodity prices has been the major factor which has deterred investors,” she says.
“It’s been possible to buy resource stocks, but you are then taking a punt on not only what they mine, but also their management ability and a currency punt as well.”
Liontamer has wrapped up a basket of base metals and oil with full capital protection and made it a New Zealand dollar investment.
Another unique feature of the fund is that it has an “accelerated upside.”
What’s an accelerated upside? Starks explains: “ If the price of the basket has risen at maturity, you’ll receive not only 100% of the rise, but an additional amount of acceleration as well.”
“At the moment we’re aiming for between 120% and 160% of the rise in the basket. An exact term and level of acceleration will be locked in once the fund closes.”
She says Liontamer can offer this feature because the forward prices of most commodities are below that of the spot price.
The fund’s capital protection is provided by Barclays Bank which has a Standard and Poors’ AA rating.
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