Diapason Launches L/S Agriculture Fund, Preps Two Others

FINalternatives.com
Published on FINalternatives (http://www.finalternatives.com)


Diapason Commodities Management is ending the year with a bang: The $7 billion Lausanne, Switzerland, commodity-focused firm today unveils a long/short agricultural fund. The firm also plans to launch an inflation-protection fund this month, as well as a long-only physical commodity fund in January.

The Diapason Long/Short Agriculture Commodity Fund is launching with $20 million in external capital, according to head trader Daniel Pyc, who expects the fund to raise a total of $500 million by the end of next year.

Pyc said the fund has the flexibility to go net long or short and engage in relative value trades between the commodities.

“There are a few funds out there playing the agricultural market via futures, but there are not many long/short equity funds, because people are more focused on energy and metals,” he said. “Today, we’re going to be long corn and we are also quite optimistic on Arabica coffee as well as cotton. I think there will be a jump of 3% to 4% in the sector within the next few weeks followed by a setback in the beginning of 2008. But we’re quite bullish for the sector in 2008.”

The fund will charge a management fee of 1.5% and an incentive fee of 20% with a US$500,000 minimum investment requirement.

In a diversion from its commodity focus, Diapason is launching the Nemesis Inflation Preservation Fund, which will look to beat the consumer price index by 3% to 5%, with some US$36 million in assets. To preserve its image, the firm has set up a separate firm called Nemesis Partners to manage the fund. “Everybody is talking about inflation and what we’re doing is providing pension funds with capital preservation,” said Pyc.

The Nemesis Fund charges a 1% management fee and a 10% incentive fee with a $500,000 minimum investment requirement.

Also, Diapason is kicking off the New Year with a long-only fund that will invest in diamonds. Pyc said the fund is a value play on the demand for high quality diamonds. “There’s a real scarcity for exceptional diamonds because production is not so high,” said Pyc. “We’re going to buy fancy stones and store them in UBS in Geneva. We hired three gemologists to source the stones and UBS will be the market maker for that fund.”