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Wednesday, May 07, 2008

Morgan Stanley Intros Commodities Alpha Fund

by: Armie Margaret Lee

Morgan Stanley Investment Management has unveiled a commodities mutual fund aimed at high net worth investors. The Morgan Stanley Commodities Alpha Fund is run by the quantitative and structured solutions group.

"We believe the combination of limitations on supply and burgeoning demand is supportive of a continued positive outlook for commodity prices," said Chris Callan, senior portfolio manager of the fund.

Company Press Release

May 06 2008 | New York
Morgan Stanley Investment Management (MSIM) announced today that it has launched the Morgan Stanley Commodities Alpha Fund, an actively managed mutual fund that offers high net worth investors the opportunity to gain direct access to the potential return and portfolio diversification benefits of the commodities market and the expertise of MSIM's Quantitative and Structured Solutions investment team.

"The Commodities Alpha Fund gives investors the potential to capture the returns of a global, diverse and growing market that has a low correlation with equity and bond market returns," said Justin Simpson, Global Head of the Quantitative and Structured Solutions team and Lead Portfolio Manager. "For investors seeking to diversify their portfolio, we believe this strategy may be an attractive opportunity for direct, actively managed exposure to the commodities asset class with the potential for incremental returns."

The Commodities Alpha Fund seeks to generate the returns of the Dow Jones AIG Commodity Index (DJAIG)( 1) and to produce incremental returns from an actively managed multi-strategy alpha engine. The Commodities Alpha Fund pursues continuous exposure to the commodities market (such as agriculture, energy, industrial metals, livestock and precious metals) through investments in commodities-linked instruments as well as fixed income securities, including money market instruments. The fund will strive for above-market returns from multiple proprietary quantitative trading strategies designed to exploit inefficiencies or anomalies in the commodities marketplace, such as price curves, price change and volatility.

"Commodities possess a number of unique properties, including currently favorable supply-demand fundamentals, that have made them an attractive alternative investment opportunity," said Chris Callan, Senior Portfolio Manager of the Commodities Alpha Fund. "We believe the combination of limitations on supply and burgeoning demand is supportive of a continued positive outlook for commodity prices. Additionally, a strategic allocation in commodities could also offer a potential hedge against the impacts of inflation, geopolitical risks and macroeconomic downturns."

The Commodities Alpha Fund is managed by the Quantitative and Structured Solutions Group. Their collective experience encompasses structuring and analysis of derivatives as well as expertise in research, risk management, trading and technology. Managing a variety of structured and quantitative pooled funds, and separate accounts, the group's capabilities cover a spectrum of quantitative investing across commodities, currencies, fixed income and equity markets. The group managed approximately $9.6 billion in assets for institutional and individual investors as of March 31, 2008.

The launch of the Morgan Stanley Commodities Alpha Fund for U.S. investors follows the Quantitative and Structured Solutions Group's launch of commodities alpha strategies for European institutional investors in November 2006 and European individual investors in June 2007.

"The launch of the Commodities Alpha Fund represents our continued commitment to leveraging the Firm's intellectual capital to deliver innovative, institutional-caliber investment products to our clients," said Randy Takian, Head of the Morgan Stanley Retail & Intermediary business at MSIM. "As individual investors are increasingly seeking allocations to alternative investment strategies that can provide an added layer of portfolio diversification and the potential for attractive returns, we are extremely pleased to add this strategy to our fund line-up and bring the expertise of our QSS team to this important client base."

Morgan Stanley Investment Management, together with its investment advisory affiliates, has nearly 1000 investment professionals around the world and approximately $577 billion in assets under management or supervision as of February 29, 2008. By leveraging its global 'community of boutiques' structure and the strength of Morgan Stanley, MSIM strives to provide outstanding long-term investment performance, service and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide.

Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 33 countries. For further information about Morgan Stanley, please visit www.morganstanley.com.

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