Mellon Capital Management, part of BNY Mellon Asset Management, has launched its Commodity Alpha Long-Bias Strategy, a commodities strategy designed to provide institutional investors with diversification beyond equities and fixed income and to provide a hedge against inflation.
The strategy is designed to add value by taking long and short positions in futures contracts for a range of liquid commodities including energy, precious metals, industrial metals, grains, livestock and other agricultural products. The strategy's managers seek positions in the commodities markets that appear attractive by evaluating various factors that can influence commodity futures prices.
"The commodities markets offer distinct investment opportunities as many of its participants are in these markets for reasons other than maximising investment profits," says Eric Goodbar, managing director and alternatives strategist for Mellon Capital. "For example, producers, processors and consumers of commodities trade to lock in physical delivery or hedge their profit margins."
While maintaining a net long position, the strategy generally uses longer-dated futures contracts and takes long or short positions in contracts with positive roll returns with the goal of mitigating the costs associated with rolling futures.
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