Valletta Fund Management Limited has launched the Wignacourt Capital Guaranteed Commodity Fund, a five-year investment denominated in euro, which gives investors the opportunity to participate in a basket of soft commodities consisting of an equal weighting of wheat, cocoa, orange juice, sugar and coffee.
The performance of each commodity will be reflected in the relative DCI BNP Paribas Enhanced Index issued by BNP Paribas and Diapason. The fund will start trading on February 21 and offers full capital guarantee of the Original Investment Amount, if held until termination date on February 21, 2013, while aiming to provide the higher of the five per cent minimum return or the basket return.
The fund will invest in five-year zero coupon notes issued by BNP Paribas Arbitrage BV and guaranteed by BNP Paribas designed to ensure that, on termination, shareholders will receive their original investment, and enter into an options contract with BNP Paribas to attain the investment return. On termination of the five-year investment period, the investment return will be equivalent to a participation rate of 75 per cent of the final performance linked to the basket of five indices or a five per cent minimum return, whichever is the higher.
Moreover, the fund also offers the advantage of an early redemption structure with the possibility to redeem the investment at the share price prevailing on any valuation day less an exit fee.
Speaking during the launch of the Wignacourt Capital Guaranteed Commodity Fund, Peter Perotti, VFM general manager said: "In today's financial markets characterised by the sub-prime turmoil, the soft commodities asset class offers an encouraging alternative. Commodities are set to benefit from at least four major structural trends for the years to come, namely rising world population, rising consumer demand and living standards, development of the biofuel industry, and water scarcity. With this in mind, we believe that the fund offers positive investment diversification to an existing portfolios."