A major bank has seeded a global “soft commodity” equities-only fund in the belief that growing population pressures will boost the popularity of this asset class in the next five years.
Launched yesterday and seeded by the Commonwealth Bank, Colonial First State Global Asset Management launched its Global Soft Commodity Share Fund at an exquisitely-cooked and exclusive lunch featuring soft commodities such as pork, lentils, chocolate, and vegetables.
Seed-funds under management at present stand at $10 million, said Skye Macpherson (pictured), portfolio manager, who added that the equities-only fund had been in formation for the past couple of years.
“It’s a very small field,” she said, “with DWS Investments and BlackRock being the only significant players in the global soft-commodities space.”
Aimed at retail and instos, the fund will invest globally in companies in the production, processing, distribution and marketing of soft commodities (such as grains, meat, fish, and forestry products), as well as the suppliers of services and inputs to these companies (such as fertiliser, crop protection and seeds).
Renzo Casarotto, senior portfolio manager, said that funds such as CalPERS had about 1 per cent of funds under management allocated to soft commodities, but he said they believed that this figure should rise to 3 to 4 per cent in the next five to 10 years.
The fund would work with a universe of about 400 stocks and look for companies with low-cost shares and with growth potential from better production techniques. “We don’t forecast commodity prices,” he said, and the fund would be unhedged.