18 March 2011

New Fund: RHB Dynamic Oil-Gold Capital Protected Fund

Launched on 11th March 2011, RHB Dynamic Oil-Gold Capital Protected fund is investing in oil and gold, which have the potential to perform in both areas that have great bullish and bearish markets.

This is a 3 years capital protected fund. As usual, it will invests at least 85% of the NAV in zero-coupon negotiable instruments of deposits. Meanwhile, up to 10% of the fund's NAV will invest in an over-the-counter (OTC) option that gave investors returns (if any).

The OTC option will provide exposure to the performance of the Option Strategy, which is an index, maintained by the issuer of the OTC option and is subject to a dynamic risk adjustment linked to the realized volatility of the underlying.

Option Strategy
This Option Strategy is a rules-based strategy computed and developed by the option issuer / counterparty. It aims to tap into the growth of oil and gold through the use of a "momentum" based strategy to capture the trends of the Underlying and also, volatility stabilization to reduce the exposure to the Underlying if the volatility is high.

The theory behind momentum strategy assumes that a leading performer from the last period will continue to be leading performer in the next period, while the volatility stabilization will protect investors against sudden changes in the Underlying prices.

How to determined the asset class?
In determining which asset class to invest into, the Option Strategy will look at the below rations:
  1. (gold price / oil price) spot ratio
  2. 60 days Moving Average (MA) of the Gold / Oil Ratio

To read the prospectus, please click here.
Source: RHB Investment Management

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