Diapason Commodities Management has launched its new Smart Beta commodity investment product, Virtuoso, reports HedgeWeek.
The new offering is being unveiled to a series of institutional investors and consultants in the US and Europe from July 2013. It is designed to generate sustainable alpha above commodity benchmark investment, including the Diapason Commodity Index (DCI) or any other investable commodity index.
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Virtuoso targets performance of 4% to 6% above the chosen benchmark depending on portfolio constraints and is designed for pension funds, endowments, insurance firms and other institutional investors all of which allocate to the commodity asset class via benchmark indices.
The investment platform enables the institutions to manage commodity exposure in times of increased market volatility, according to HedgeWeek.
Commodity benchmark investment is enhanced in two ways with Virtuoso. Firstly by incorporating a proprietary curve optimisation algorithm that maximises the roll return implicit in commodity index investment. Secondly by adding a tactical allocation overlay which uses fundamental and market sentiment indicators including relative inventory levels and macroeconomic data, as well as the positioning of market participants on underlying commodities to identify extreme conditions and to anticipate market reversals.
Mark McDonnell, managing director of Diapason, said: "Commodity investment is evolving and remains a fundamental component of institutional investment portfolios, as a diversification tool, as a hedge against inflation and as a source of tangible asset performance.
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By GlobalData"Our Virtuoso Smart Beta platform has been developed based on client demand from investors who want a more sophisticated approach to commodity index investment and who are looking to exploit the return potential of the asset class given the current stage of the business cycle."
