Sirius Wealth Launch Starts with Commodity Fund
Sirius Wealth Launch Starts with Commodity Fund As Global Commodity ‘Boom’ Gathers Momentum
28 May 2008
To take advantage of the world-wide ‘boom’ that looks set to continue in the foreseeable future, fund manager Sirius Wealth has launched its retail investment operation with a New Zealand ‘first’. Namely a specialist commodity portfolio, managed by parent company Commodity Strategies Limited that kicks off Sirius Wealth’s plans for a number of other innovative investment funds planned for the year.
According to Sirius Wealth CEO Robert Holroyd, their approach is to create investment portfolios that capitalise on the company’s knowledge, expertise and international affiliations and achievements.
The Commodity Portfolio is an extension of a similar fund Commodity Strategies manages for Australian-based Macquarie Bank—one that was voted by The Australian as among the Top 100 performers to watch in 2008. It is also the only fund on the list managed by a New Zealand-based group.
According to Robert Holroyd, the particularly bullish commodity sector, combined with return profile of this area of investment, prompted the company to launch its New Zealand retail activities with this new specialist fund.
“The global commodity boom is really just underway and indicators point to it maintaining growth for some time to come. That in itself makes this fund an investment worth considering.”
In addition, the poor performance that more traditional investment vehicles have been taking of late means investors should be looking at fresh horizons.
“Equities have been very volatile on the back of the sub-prime crisis as well as the potential for a United States-based recession. There is continued potential for inflation - and therefore interest rate increases - which in turn bodes ill for New Zealand Bonds. In addition, the once ‘darling of the retail investor, finance company deposits, have comes seriously unstuck in 2007. Prospects for 2008 look equally disturbing. Residential real estate is yet another area that is likely to stall, or fall, over the next 12 months.”
No surprise then, says Robert Holroyd, that a number of international research houses, such as Australian-based Van Eyk, are saying gold, commodities and commercial real estate are the places to put one’s money.
The unleveraged long only portfolio produced a return of approximately 24.5% after fees for the 2007 year. Based on six month performance figures, the ‘long / short’ combination of the Sirius Commodity Portfolio would have produced a return of approximately 19.5%.
About the Sirius Wealth Commodity Portfolio
The Sirius Wealth Commodity Portfolio is a unit trust that is designed to provide investors with an efficient exposure to a diversified portfolio of commodities including the likes of metals, energies and agricultural products. Similarly, a specialist bio-fuel fund was launched in January 2008.
“Unlike shares, commodities are consumed and need to be replaced by either growing, extracting or refining. As such the major drivers for commodity prices are supply and demand which is very different from many other investments. This is why they provide sound diversification to traditional investment portfolios,” says Robert Holroyd.
In addition, he says, three unique characteristics of commodity investments make the Portfolio an even more alluring proposition.
“In the first instance, commodities have a similar return to equities when measured over a significant period of time.
“Secondly they provide an excellent balance to a portfolio as they have a low correlation with bonds and equities. This tends to smooth out portfolio returns as demonstrated during the recent international equities upheaval.
“Finally, commodities have a positive correlation with inflation which then tends to mean real values are maintained in an investment.”
A straight commodity investment, says Robert Holroyd, has merit but when built into a portfolio that also includes a spread of equities, diversification is achieved meaning returns are more stable while the risk volatility can be reduced.
Robert Holroyd says that the Sirius Wealth Commodity Fund will be the first launched by the company in the New Zealand market. Some new retail focussed fund vehicles are being planned for launch in mid- 2008 in both the New Zealand and Australian markets.