Morgan Stanley Investment Management (MSIM) announced today that it has launched the Morgan Stanley Commodities Alpha Fund, an actively managed mutual fund that offers high net worth investors the opportunity to gain direct access to the potential return and portfolio diversification benefits of the commodities market and the expertise of MSIM’s Quantitative and Structured Solutions investment team.
“The Commodities Alpha Fund gives investors the potential to capture the returns of a global, diverse and growing market that has a low correlation with equity and bond market returns,” said Justin Simpson, Global Head of the Quantitative and Structured Solutions team and Lead Portfolio Manager. “For investors seeking to diversify their portfolio, we believe this strategy may be an attractive opportunity for direct, actively managed exposure to the commodities asset class with the potential for incremental returns.”
The Commodities Alpha Fund seeks to generate the returns of the Dow Jones AIG Commodity Index (DJAIG) 1 and to produce incremental returns from an actively managed multi-strategy alpha engine. The Commodities Alpha Fund pursues continuous exposure to the commodities market (such as agriculture, energy, industrial metals, livestock and precious metals) through investments in commodities-linked instruments as well as fixed income securities, including money market instruments. The fund will strive for above-market returns from multiple proprietary quantitative trading strategies designed to exploit inefficiencies or anomalies in the commodities marketplace, such as price curves, price change and volatility.
“Commodities possess a number of unique properties, including currently favorable supply-demand fundamentals, that have made them an attractive alternative investment opportunity,” said Chris Callan, Senior Portfolio Manager of the Commodities Alpha Fund. “We believe the combination of limitations on supply and burgeoning demand is supportive of a continued positive outlook for commodity prices. Additionally, a strategic allocation in commodities could also offer a potential hedge against the impacts of inflation, geopolitical risks and macroeconomic downturns.”
The Commodities Alpha Fund is managed by the Quantitative and Structured Solutions Group. Their collective experience encompasses structuring and analysis of derivatives as well as expertise in research, risk management, trading and technology. Managing a variety of structured and quantitative pooled funds, and separate accounts, the group’s capabilities cover a spectrum of quantitative investing across commodities, currencies, fixed income and equity markets. The group managed approximately $9.6 billion in assets for institutional and individual investors as of March 31, 2008.
The launch of the Morgan Stanley Commodities Alpha Fund for U.S. investors follows the Quantitative and Structured Solutions Group’s launch of commodities alpha strategies for European institutional investors in November 2006 and European individual investors in June 2007.
“The launch of the Commodities Alpha Fund represents our continued commitment to leveraging the Firm’s intellectual capital to deliver innovative, institutional-caliber investment products to our clients,” said Randy Takian, Head of the Morgan Stanley Retail & Intermediary business at MSIM. “As individual investors are increasingly seeking allocations to alternative investment strategies that can provide an added layer of portfolio diversification and the potential for attractive returns, we are extremely pleased to add this strategy to our fund line-up and bring the expertise of our QSS team to this important client base.”
Morgan Stanley Investment Management, together with its investment advisory affiliates, has nearly 1000 investment professionals around the world and approximately $577 billion in assets under management or supervision as of February 29, 2008. By leveraging its global ‘community of boutiques’ structure and the strength of Morgan Stanley, MSIM strives to provide outstanding long-term investment performance, service and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide.
Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 33 countries. For further information about Morgan Stanley, please visit www.morganstanley.com.
Please consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. The prospectus contains this and other information about the Fund. To obtain a prospectus, contact your financial advisor. Please read the prospectus carefully before investing.
1 “Dow Jones,” “AIG®” “Dow Jones AIG Commodity IndexSM,” and “DJ-AIGCISM” are service marks of Dow Jones & Company, Inc. and American International Group, Inc. (“American International Group”), as the case may be, and have been licensed for use for certain purposes by Morgan Stanley. The Morgan Stanley sponsored Morgan Stanley Commodities Alpha Fund which seeks returns based on the Dow Jones AIG Commodity IndexSM, is not sponsored, endorsed, sold or promoted by Dow Jones, AIG Financial Products Corp. (“AIG-FP”), American International Group, or any of their respective subsidiaries or affiliates, and none of Dow Jones, AIG-FP, American International Group, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product.
There is no assurance that a mutual fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that the market values of securities owned by the fund will decline and that the value of fund shares may therefore be less than what you paid for them. Accordingly, you can lose money investing in this fund. Please be aware that this fund may be subject to certain additional risks.
Commodity Risk. The Fund’s investment exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities, such as stocks and bonds. The commodities markets may fluctuate widely based on a variety of factors. These include changes in overall market movements, domestic and foreign political and economic events and policies, war, acts of terrorism, changes in domestic or foreign interest rates and/or investor expectations concerning interest rates, domestic and foreign inflation rates and/or investor expectations concerning inflation rates and investment and trading activities of mutual funds, hedge funds and commodities funds. Because the Fund’s performance is linked to the performance of highly volatile commodities, investors should consider purchasing shares of the Funds only as part of an overall diversified portfolio and should be willing to assume the risks of potentially significant fluctuations in the value of Fund shares. Commodity-Linked Notes. The Fund’s investments in commodity-linked notes involve substantial risks, including risk of loss of a significant portion of their principal value. In addition to commodity risk, they may be subject to additional special risks, such as risk of loss of interest and principal, lack of secondary market and risk of greater volatility, that do not affect traditional equity and debt securities. Risks of Investment in Wholly-owned Subsidiary. By investing in the Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiary’s investments. The Subsidiary will not be registered under the Investment Company Act and, unless otherwise noted in this prospectus, will not be subject to all of the investor protections of the Investment Company Act. However, the Subsidiary’s portfolio will be subject to the same investment restrictions and operational guidelines that apply to the management of the Fund. Swaps. The Fund will be subject to counterparty risk with respect to the amount it expects to receive from counterparties to swap transactions. If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund could suffer losses. Swaps are not traded on exchanges, do not have uniform terms and in general are not transferable without the consent of the counterparty. Fixed-income securities. Subject to credit and interest-rate risk. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest-rate risk refers to fluctuations in the value of a fixed-income security resulting from changes in the general level of interest rates. In a declining interest-rate environment, the portfolio may generate less income. In a rising interest-rate environment, bond prices fall. Non-Diversification. The risks of investing in the Fund may be intensified because the Fund is nondiversified; which means that it may invest in securities of a limited number of issuers. As a result, the performance of a particular investment or a small group of investments may affect the Fund’s performance more than if the Fund were diversified.
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