Luxembourg-headquartered VAM Funds has launched its Commodities Equity Fund aimed at allowing investors access to what it sees as attractive investment opportunities in the commodities sector.

The fund has been launched in partnership with London-based family office Fleming Family and Partners - FF&P - Asset Management, which will be placing an initial seed investment into the fund on behalf of its clients.

The fund seeks to achieve capital appreciation through exposure to global commodities markets by investing in commodities-related equities. To achieve this, the fund will operate a core and satellite approach with an additional protective layer provided by aggressive use of cash and ETFs, the firm said.

The core (30-70 per cent of the portfolio) is composed of a basket of large cap stocks that VAM thinks will provide an effective way to participate in rising markets. In declining markets this basket will be sold to preserve the fund’s assets, meaning that it is highly liquid, according to the firm.

The satellite layer is a collection of stocks which are expected to produce outsized returns relative to their individual risks. These stocks will be typically less liquid but sized appropriately to control risk.

Finally, a defensive layer consists of inverse ETFs to profit from market declines. The extent of their use will vary depending on conviction, with larger position sizes reserved for long-term downtrends.

The new fund is UCITS III compliant and is a sub fund of VAM Funds (Lux) SICAV.