Pathfinder looks for beta times

Two former Deutsche Bank executives have launched a new funds management firm that promises to deliver “unique” index fund products.

Wednesday, April 15th 2009, 6:15AM

by David Chaplin

Paul Brownsey, Pathfinder Asset Management executive director, said he and co-founder, John Berry, aimed to offer New Zealand investors access to previously hard-to-access international asset classes.

Brownsey said the boutique firm would launch a range of “smart beta” funds that track “intelligent benchmarks” in a transparent, cost-effective and tax-efficient way.

Pathfinder's first product, which launched this month, is a commodities fund that tracks the 'Deutsche Bank Liquid Commodity Index – Mean Reversion Plus Access'. Essentially, the Deutsche index follows a basket of six commodities – corn, wheat, gold, heating oil, aluminum and light crude – with daily weightings adjusted in line with historical pricing trends.

The Deutsche benchmark is also moderated monthly by a changing allocation to cash that is designed to cushion the effects of longer-term commodity cycles by “differentiating between short-term price moves and long-term trends”, the Pathfinder Commodity Fund investment statement says.

Brownsey said the Pathfinder fund will initially buy 'perpetual notes' issued by Deutsche Bank to access the commodities index with some currency hedging where appropriate. He said a private bank has seeded the fund, which has a minimum of $100,000 for direct investments.

However, Pathfinder funds will also be available through wrap platforms with a minimum initial investment of $5,000 and $1,000 for subsequent amounts.

“We think retail investors need to take advice for our products,” Brownsey said. He said the group has already approached a number of the “larger” financial advisory networks to gauge demand.

Brownsey also played down fears that the bleak economic outlook would diminish the prospects for Pathfinder's first offering.

“Commodities tend to lead economies out of recession,” he said.

While world equity markets have been down between 30-50% over the last year, Brownsey said the Deutsche commodities index was “flat” over the same period. He said Pathfinder also had “other products up our sleeves”.

Former head of AMP Capital Investors, Catherine Savage, and ex Citibank NZ chief, Sandy Maier, are independent directors on the Pathfinder board.

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