VFM launches commodity fund
In financial markets characterised by the sub-prime turmoil, the soft commodities asset class offers an encouraging alternative, according to Peter Perotti, the general manager of Valletta Fund Management. Mr Perotti was speaking at the launch of...
In financial markets characterised by the sub-prime turmoil, the soft commodities asset class offers an encouraging alternative, according to Peter Perotti, the general manager of Valletta Fund Management.
Mr Perotti was speaking at the launch of VFM's 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.
"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 existing portfolios," he said.
The fund will commence 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 5 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 upon termination shareholders will receive their original investment, and enter into an options contract with BNP Paribas with the aim to attain the investment return. Upon termination of the five years, 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 5 per cent minimum return, whichever is the higher.
The fund also offers the possibility to redeem the investment at the share price prevailing on any valuation day less an exit fee.
Mr Perotti was speaking at the launch of VFM's 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.
"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 existing portfolios," he said.
The fund will commence 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 5 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 upon termination shareholders will receive their original investment, and enter into an options contract with BNP Paribas with the aim to attain the investment return. Upon termination of the five years, 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 5 per cent minimum return, whichever is the higher.
The fund also offers the possibility to redeem the investment at the share price prevailing on any valuation day less an exit fee.