Hedge Fund Shuns Gold, Oil For Diamonds

May 26 2011 | 10:49am ET

Lots of hedge funds are high on gold, and many others can't get enough silver. But only one, as far as we know, has chosen a girl's best friend as its chief inflation hedge.

Covenant Financial Services said this week that it has poured some of its $275 million in assets into building a portfolio of "large, rare and highly-sought-after" diamonds. The Oklahoma City-based firm has been buying the precious stones since November instead of gold or oil.

"One of the trends we are seeing now is an enormous multi-generational transfer of wealth take place from the West to the East, and moving a small portion of our capital into diamonds is one of the ways we are profiting from this," Steve Shafer, chief investment officer, said. And that transfer is taking place at just 50 cents to 60 cents on the dollar.

Covenant plans to hold the stones for between one and three years.

Diamonds and other gems currently make up less than 5% of Covenant's assets.


In Depth

Israeli Hedge Fund Harnesses Big Data

Jul 28 2014 | 8:10am ET

Apica Green is a multi-million dollar Israeli hedge fund that is based in Tel Aviv...

Lifestyle

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Guest Contributor

Compelling Opportunities In The Alternatives Space

Jul 29 2014 | 9:33am ET

In an environment where many asset classes seem expensive by historical standards...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note