Shield Plus, a Minneapolis-based CTA and CPO, is revving up its marketing effort for its three-year old energy and inflation hedge fund.Shield Plus 90-Alternative Energy & Inflation Fund, a market-neutral vehicle investing in the alternative energy and inflation-related markets with some $5.5 million in assets.
Jim MahnkeAccording to Shield founder Jim Mahnke, the fund is a net-long volatility play on options, concentrated primarily in the energy complex such as crude oil, natural gas, ethanol and other renewable energy sources including gold and corn. It employs a bottom up market-neutral investment process in an attempt to capitalize on a net change in volatility, and does not seek to anticipate market direction.
Given the fund’s three-year record, Mahnke believes it is time to test the institutional marketplace and will start with the introducing broker and consultant crowd. The fund, which began trading in January 2004, was up 143.34% that year and returned 82.24% the following year. However, the fund came fell back to earth last year, returning just 2.02% in a year of declining energy prices and volatility by industry observers.
“We actually believe that last year, on a relative basis, was our best year, primarily because we’re a net-long volatility manager,” said Mahnke. “Given that market initiative, the worst-case scenario for us is if implied volatility comes down, which means long option values decreases. We actually had a positive return for our clients and they’re exceedingly happy.”
The fund charges a 2% management and 20% performance fee, with a minimum investment requirement of $50,000.
Mahnke, a former senior vice president at ING/ReliaStar Corp., founded Shield Plus in 2001.