Equinox Fund Management [see profile]
, a Denver-based alternative investment specialist, on Monday unveiled a market-neutral mutual fund called Equinox Commodity Strategy Fund
. [SEC filing
The fund comes in A, C and I share classes.
Equinox has one other mutual fund its product roster, the MutualHedge Frontier Legends Fund
. The company also offers the Frontier Fund, a family of managed futures funds.
Company Press Release
Equinox Fund Management Announces Launch of Equinox Commodity Strategy Fund
DENVER, June 13, 2011 -- Equinox Fund Management, LLC, a sponsor of alternative investment funds ("Equinox"), today announced the launch of Equinox Commodity Strategy Fund ("the Fund"), a market-neutral mutual fund designed to produce returns by exploiting potential inefficiencies in the systematic selling and repurchasing of expiring futures contracts commonly employed by long-only commodity strategies. The Fund has three classes of shares, with the symbols EQCAX, EQCCX and EQCIX.
The Fund offers investors an opportunity to diversify their current holdings in long-only commodity funds and ETFs, by employing a long-short investment program.
The Fund's investment program is designed to address three challenges common to long-only commodity funds:
1.The high level of volatility inherent in many long-only commodity funds;
2.The increasing correlation of long-only commodity funds to other asset classes – a problematic trend due to the fact that many investors seek out commodity funds for their lack of correlation; and
3.The systematic negative roll yields that long-only commodity funds and ETFs often face in commodity markets with rising price curves (markets in "contango").*
Robert Enck, President and CEO of Equinox, hailed the Equinox Commodity Strategy Fund as a natural extension of the firm's focus on innovation and deliberate design: "At Equinox, we keenly appreciate both the opportunities and challenges of investing in commodities. We have created the Equinox Commodity Strategy Fund as a means to address critical issues of volatility, correlation, and index integrity, while providing investors with an investment that draws upon our knowledge and experience in the commodity markets."
Markets in contango pose particular difficulties for long-only funds. Because futures contracts are sold and repurchased, forward prices commonly can be higher than spot prices. Accordingly, an investor desiring to hold a long position past the expiration of the current futures contract must sell that contract at a lower price and pay a higher price to buy a new one to maintain exposure to the commodity. The resulting systematic loss, or tracking error, is known as "negative roll yield."
Rich Bornhoft, CIO of Equinox Fund Management, said, "The objective of the Fund is to avoid incurring negative roll yield in contangoed markets by investing in a proprietary index that employs algorithms to optimize the manner and timing in which futures contracts are bought and sold. The Fund also seeks to profit in each commodity market it trades by using a number of other enhanced algorithm-based rolling mechanisms."
The Fund employs a market neutral strategy that is equally long and short each commodity. It uses a targeting mechanism to dampen volatility, the goal of which is a standard deviation of 6% or less. The strategy seeks to profit in rising or falling market environments, while providing low-to-negative correlation to traditional investments.
About Equinox Fund Management
Equinox Fund Management, which manages over $1.1 billion in assets, specializes in the design and distribution of innovative alternative investment products for both accredited and non-accredited investors in the United States. Its senior leadership has been involved in the commodities and futures markets since 1979, providing the firm with unusual insight into under-served markets in the alternative investment sector. In addition to the Equinox Commodity Strategy Fund, Equinox sponsors MutualHedge Frontier Legends Fund and The Frontier Fund, a public managed futures fund with daily liquidity.
*Contango: A market configuration in which futures contract prices increase as maturities get longer. Source: sgindex.com.
Securities offered through Bornhoft Group Securities Corporation, Member FINRA.
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