Commodity FundA Commodity Fund Built on Sustainability
The Klean Commodity Fund ("KCF") will be a composite, Euro dollar-based, total return index designed by the founders of Klean. The KCF was designed to leverage the massive market demand for sustainable green commodities and to meet the need for consistent investing in a broad based international vehicle. This Fund will represent the value of a basket of green commodities that fit into today's existing supply chain and that are consumed on a large volume basis in the global economy, ranging from agricultural to energy and metals products. The value of this basket will tracked via futures contracts on 37 different exchange-traded physical commodities, quoted in five currencies, listed on thirteen exchanges in six countries.
The KCF aims to be an effective measure of the price action of raw materials not just in the Europe and the United States but also around the world. Indeed, the KCF's weightings attempt to balance consumption patterns worldwide (in developed and developing countries) and specific contract liquidity.
The Klean Commodity Fund Committee
The KCF Committee formulates and enacts all business assessments and decisions regarding the composition of the Index. Klean, as the founder of the KCF and sole owner of its Interests, chairs the KCF Committee and is the final arbiter of its decisions. Beside Klean, representatives of several of the leading assets management and commodity funds are to become members of the Klean Committee. Only Klean, as chairman of the committee, is authorized to designate new members of the committee, if necessary.
The KCF Committee meets each December prior to year end to consider changes in the components and weightings of the KCF for the following calendar year; however, such changes can be made at any time. Please see our corporate governance section for more details on KCF's governance polices by clicking here.
Commodities as an Inflation Hedge
Ultimately, investors focus on the real purchasing power of their returns, which means that the threat of inflation is always a concern. Real assets, like commodities, are linked to inflation's key components---the cost of the raw goods themselves and commodity prices have usually risen along with increasing inflation.
The historical characteristics of the commodity and stock markets show very low correlations. Current global supply and demand for raw materials is the main driver of commodity prices, rather than their value being tied to expected future cash flows as with financial assets. Because of this, green commodities have offered significant diversification benefits, historically reducing the overall risk of a well-diversified portfolio, while adding a new source of potential return.
Sustainable Commodities introduce what we believe is a valuable global element into portfolios. For example, the global forces of demand and supply can combine in constantly shifting proportions, disrupted by discrete and largely unpredictable geopolitical events, (including workstoppages, weather and war), thereby affecting the local production of commodities. A commodities allocation is often included in a portfolio as a hedge against macro and political risks.
To provide a total return in excess of the Goldman Sachs Commodity Index (GSCI) hedged in Euros. The Fund will have exposure to the GSCI through the purchase of commodity linked derivative instruments. The Fund aims to generate a total return derived from three sources.
- Spot return -- performance will largely result from the change in prices of commodities within the GSCI
- Roll return is captured by rolling the expired derivative contracts forward which is the difference between entry and exit prices, and
- Collateral return or cash rate is the return on investing in cash and cash like securities. The Fund assets are posted as collateral for the derivatives contracts.
For inquiries on equity participation in the Klean Commodity Fund, please contact us!.