KUALA LUMPUR: AmInvestment Bank Bhd is planning to capitalise on the global commodity boom with its new fund called AmCommodities Extra.
Managing director Kok Tuck Cheong said the long-term outlook for commodities remained positive due to a mismatch of supply and demand, which had raised commodity prices.
“Commodities have low correlation to equities and bonds, and therefore provide investors another alternative class of investment to enhance their portfolio as well as preserve their wealth against inflation,” he said at the launch of the fund yesterday.
At the launch of AmCommodities Extra. From left: Yvonne Phe, Kok Tuck Cheong, Citibank Bhd head of wealth management Aisyah Lam and Datin Maznah Mahbob
“It has been observed that commodities have consistently outperformed inflation and commodity prices are rising faster than inflation rate.”
On the high volatility that the market experienced lately, chief investment officer (fixed income) Yvonne Phe said the fund had a “revolver strategy” feature, which would reduce exposure of underlying assets during vicious swing and increase exposure when volatility subsided.
AmCommodities Extra invests 90% in fixed income instruments and 10% in structured derivative instruments with exposure to potential upside of commodities theme. These structured derivatives provide 75% exposure in Rogers International Commodity Index (RICI), an index managed by Jim Rogers, a well-known commodities guru, while the remaining underlying assets consist of commodity-related equity indexes in Australia, Brazil and China.
However, this fund does not include crude palm oil (CPO) because of its thin trading volume. Chief executive officer Datin Maznah Mahbob said the fund would emphasis on liquidity but she might consider CPO in the future if the liquidity improved.
Meanwhile, director (retail funds) Ng Chze How said this fund provided an opportunity for portfolio diversification, as most of Malaysian investments were in bonds, equities and cash.
“For investors who can assume medium to high risk, they should consider this class of investment,” he said.
As at June 30, RICI constituted 44% energy, 34.9% agriculture and livestock, and 21.1% precious metals.
Ng said AmInvestment expected AmCommodities Extra to be fully subscribed in six to 12 months.
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