Insight Investment diversified target return fund looks to agricultural commodities

A year after it converted to UCITS III status, the Insight Investment Diversified Target Return Fund (DTR) reports top decile performance and continuing low volatility

Patrick Armstrong, co-manager of the Diversified Target Return Fund said: "UCITS III status has allowed the Insight Investment Diversified Target Return Fund greater flexibility as well as access to derivatives, which in turn support the fund's underlying objective - diversification".

"Investors in the fund have benefited from systematic low volatility in the face of recent market instability thanks to the breadth of access and flexibility we have to asset classes and market instruments which are suited to changing market conditions." DTR's UCITS III structure allows its managers the flexibility to invest in funds which in turn are invested in a range of traditional asset classes as well as commodities, structured products and derivatives with the aim of reducing volatility and smoothing returns through investment market cycles.

Patrick Armstrong bullish on agricultural commodities Rising wheat prices have brought agricultural commodities to the fore of the economic news agenda.

DTR has held agricultural commodities as a central portfolio theme for the past two years through direct positions in corn, wheat, soya beans and sugar.

Rising global demand will not be able to be met through yield expansion on existing land.

New acreage is likely to be less fertile, requiring more irrigation, fertilizers and intensive farming techniques in order to make it viable.

We expect companies involved in farm equipment, fertilizers and pesticides will be significant beneficiaries of increased demand for grain.

The fund has taken positions in DWS Agribusiness and more recently CF Eclectica Agricultural Fund to benefit from this anticipated demand.

Patrick Armstrong says: "We know that the global population is growing, the United Nations predicts by 2050 that it will have increased by 40%".

"This is clearly going to create additional demand for all commodities".

"At the same time we are seeing an emerging middle class in the BRIC countries".

"There are a billion people in India and China now earning $300 a year".

"A portion of that money is being spent on improving their diet and eating more meat".

"This will have a huge effect on the demand for grains, as it takes 25 kilograms of grain to produce 1 kilogram of beef*".

Armstrong continues: "Agricultural commodities will remain a key theme within the DTR fund".

"We have already seen some grain prices double in the past 12 months largely due to an imbalance in supply and demand".

"We see the recent movement in prices as the beginning of a trend, rather than a short term spike and envisage further price rises." The Insight DTR fund has a highly diversified multi-asset, multi-region structure that is focused on locating and enhancing alpha.

Since UCITS III conversion the fund has returned 9.39%** versus a sector median of 6.29%.

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