Kottke to set up agricultural arbitrage hedge fund

“The agricultural arbitrage strategy is popular with investors as it is uncorrelated with traditional equity and bond markets and is useful for portfolio diversification,” said Ron Seliga, shareholder at Kottke Associates.

An agricultural arbitrage strategy typically aims to take advantage of mispricings between agricultural contracts of differing maturities. It also aims to capitalise on the spread between interrelated commodities, such as soya bean and soya bean derivatives such as meal and oil.

The fund, which initially hopes to raise $20 million, is aiming for returns of between 15% and 20% while keeping minimal downside volatility, said Seliga. Kottke Associates currently has six programmes based on its commodity futures trading strategy, with around $80 million under management.

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• Topics
• Foreign exchange
• Exchanges
• Structured products