Tata MF’s new fund to invest in commodity derivatives

Tata Mutual Fund has launched the Tata Multi Asset Opportunities Fund, the first in the mutual fund industry to invest in exchange-traded commodity derivatives.

The issue, which opened for subscription on Friday, will close on February 28. The minimum investment is ₹5,000.

The fund will invest in three asset classes, including equity, commodity derivatives and debt. The Indian commodity spectrum has been primarily focussed on gold. Exchange-traded commodity derivatives allow investors to opt for other commodities such as base metals, agricultural commodities, industrial chemicals, and crude oil, among others.

The fund will invest up to 25 per cent of its assets under management (AUM) in such a way that its exposure to single commodity is not more than 10 per cent of the AUM.

Prathit Bhobe, Managing Director, Tata Asset Management (TAM), said after the launch of artificial and machine language-powered quant fund, this is the second among the innovative products which has the potential to open up a ₹100-lakh crore investment opportunity.

Rahul Singh, CIO-Equities, Tata Asset Management, said negative correlation between different assets ensures not all investments fail at the same time giving stability to the portfolio and reduces risk besides the ability to deliver consistent returns.

Aurobinda Prasad Gayan, Head - Commodities Strategy, TAM, said commodities through arbitrage and selective directional strategies have the potential to generate returns across market phases.