Photo credit: *MarS
RICI is an index of various commodities introduced by Jim Rogers in 1998. Jim Rogers was a partner with George Soros in the successful Quantum Fund. He has been bullish on commodities and had published a book titled “Hot Commodities” in 2004. In his words, “People are consuming more and more, with fewer farmers and less farmland. Agriculture prices must go higher.” He expects the rise to continue up to 2020.
Commodities price has been on the uptrend and especially in 2008, countries all over the world have experienced high inflation due to high oil and food prices. 2 main reasons that may have caused the rise are:
1) Rising food and oil demand from fast growing large population countries – India and China
2) Diverting food commodities to produce biofuels
As of October 07, the RICI components are:
Crude Oil – 21.00%
Brent – 14.00%
Wheat – 7.00%
Corn – 4.75%
Cotton – 4.05%
Aluminium – 4.00%
Copper – 4.00%
Gold – 3.00%
RBOB Gasoline – 3.00%
Natural Gas – 3.00%
Soybeans – 3.00%
Soybean Oil – 2.00%
Sugar – 2.00%
Live Cattle – 2.00%
Coffee – 2.00%
Zinc – 2.00%
Silver – 2.00%
Lead – 2.00%
Heating Oil – 1.80%
Platinum – 1.80%
Gas Oil – 1.20%
Lean Hogs – 1.00%
Cocoa – 1.00%
Nickel – 1.00%
Tin – 1.00%
Rubber – 1.00%
Lumber – 1.00%
Soybean Meal – 0.75%
Canola – 0.67%
Orange Juice – 0.66%
Rice – 0.50%
Oats – 0.50%
Azuki Beans – 0.50%
Palladium – 0.30%
Barley – 0.27%
Greasy Wool – 0.25%
The fund is seperated into 4 share classes, A, B, C and D. Class A and B are traded in USD, C is traded in HKD and D is traded in SGD. Class A, B and D are available in Singapore and distributed by DBS and Standard Chartered.
Fund expenses:
Preliminary charge: 4% for Class A, 5% for the rest
Investment manager fees: 0.6% for Class A, 1.25% for the rest
Fixed fees: not more than 0.2%
It was also mentioned in the prospectus that the maximum annual running cost should not exceed more than 2%.
