New Listed Diamond Hedge Fund

Foreign markets, especially London, continue to innovate with listed alternatives far more than the US. The US just recently listed the first quasi-hedge fund (GLRE), although there is news that Man is preparing to list the first true hedge fund in the US.

(Although I must say I am looking forward to returning to the “cheaper” cities of NYC and LA after my London trip – it’s expensive here! If any readers are in NYC – drop me a line – I will be there Mon. and Tues.).

A new fund investing in diamonds is to begin trading in London – the full FT article is here.

“Diapason Commodities Management is aiming to raise $400m for the first listed fund to invest in gemstones, buying only large polished diamonds worth more than $1m…[Stephan Wrobel, partner at Lausanne-based Diapason] said Diamond Circle Capital, an Isle of Man closed-end fund that starts trading on the main London market on July 10, will make it easier to invest in the market and its listed structure will provide investors with liquidity if they wish to sell.

The fund will trade the stones it buys but is planning only 15-20 per cent turnover in its portfolio each year, making it closer to the passive open-ended exchange-traded funds (ETFs) that have proliferated for many commodities.

“The idea is to have a portfolio that is well diversified and representative of the diamond market,” Mr Wrobel said. “Most of the time they will be locked in a safe at UBS.” He said the average value of diamonds bought would be about $3m.”