R.G. Niederhoffer Capital Management Launches Inflation Protection Hedge Fund

Sep 22 2011 | 10:27am ET

Roy Niederhoffer, whose flagship Diversified Program returned 9.5% this past August (the industry’s worst month in three years), has launched a new fund designed to protect investors against inflation.

The R.G. Niederhoffer Inflation Protection Program, which started operations in August and gained 4.5% in its first month of trading, combines short-term long-side trading in commodities and short-side trading in fixed income with bi-directional trading in equities and foreign exchange, according to a source close to the fund.

The new vehicle—iHedge—will be long commodities and short fixed income at the end of each trading day to protect against inflation expressed as rising commodity prices or rising interest rates.

The core driver of the fund is the same as that of R.G. Neiderhoffer Capital Management’s 18-year-old Diversified Program, which uses a short-term, quantitative (primarily although not exclusively) contrarian approach to trade multiple asset classes. The fund will hold positions for an average of one to three days, with certain positions—long commodities and short fixed income—held for up to a few weeks, and will offer monthly liquidity. An offshore version will begin trading in September.

The minimum investment in the new fund is $1 million, fees are the standard 2% and 20%, and the firm is reported to be looking at raising $500 million.

“This is something new,” the source told FINalternatives, “We don’t think that there’s anyone combining short-term trading as a positive expectation generator with the directionality of a long commodity or a macro fund.”

Neiderhoffer’s flagship diversified program manages roughly $379 million, while overall his eponymous firm has $445 million in assets under management.

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