New Osmium Share Class Offers All That Glitters

Jan 29 2009 | 2:24am ET

Hedge fund Osmium Capital Management is offering investors a return to the gold standard, of sorts. The Bermuda-based firm is launching an new share class of its Special Situations Fund, denominated not in currency, but in gold.

Osmium said the move was designed to help investors cope with global economic crisis, according to MarketWatch, which obtained a copy of a letter the firm sent to its clients.

“We believe that this is a new way to invest in a hedge fund,” Osmium wrote. “Given the challenging market environment, some investors want exposure to gold, which has historically been a good source of value during times of economic crisis.”

“Many investors are already heavily exposed to the major fiat currencies and wish to diversify into gold, without losing their ability to invest,” the firm added.

Osmium Special Situations manages US$178 million, and is already available in U.S. dollar-, euro- and pound Sterling-denominated share classes. The gold share class will offer the same returns as that of the other classes, but will be denominated in troy ounces of gold.

Osmium’s move follows a similar one by SuperFund, which in November filed for Securities and Exchange Commission approval of the SuperFund Gold fund, which will use the same strategy as its other funds but will be denominated in ounce of gold.

Nor are Osmium and SuperFund the only hedge fund shops turning to the precious metal. Greenlight Capital, the activist hedge fund shop headed by David Einhorn, is not offering a gold-denominated fund, but it is investing in the metal for the first time ever.

In the wake of its first-ever down year—Greenlight’s eponymous $5.1 billion fund lost 23% last year—Einhorn told investors in a Jan. 20 letter that the fund will buy gold to combat the threat of inflation in major currencies, Bloomberg News reports. In addition to investing directly in gold, Greenlgiht will buy options on the metal and a gold mining exchange-traded fund.


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