DOW JONES: To Decrease Risk, Commodity Fund Goes Long/Flat

NEW YORK (Dow Jones) — After watching the commodity markets whipsaw last year, Ed Egilinsky, head of alternative investments at Direxion Funds, was looking for a better way to invest in them. “Declines in commodities can be rather severe, and minimizing downside risk is key,” Egilinsky said. “For pure commodity funds, the most important thing is dampening volatility.”

These goals led Egilinsky to a commodity product that mixes active and passive trading strategies: the long/flat index. Long/flat commodity indexes take long positions if markets are trending up and switch to short-term Treasury bills if markets are sliding.

  • Direxion Indexed Commodity Strategy Fund changed from a long/short index
  • Fund aims to decrease volatility and mitigate downside risk
  • New benchmark up 4.4% year-to-date as of Jan. 31

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