SOURCE: Arrow Funds
March 30, 2011 09:00 ET
Arrow Launches Commodity Fund Designed to Appeal to Long-Term Investors
Based on the Longview Extended Commodity Index (LEX), the Arrow Commodity Strategy Fund Targets the Long-Term Performance of Global Commodities Markets With Reduced Volatility
OLNEY, MD--(Marketwire - March 30, 2011) - Arrow Funds today announced the latest addition to its growing lineup of alternative investment mutual funds. Benchmarked to the Longview Extended Commodity Index (LEX), the Arrow Commodity Strategy Fund (CSFFX: A Shares; CSFTX: C Shares) is designed to appeal to long-term investors who seek broad-based commodities exposure, but with less of the asset class's characteristic volatility and turnover.
"As more investors are drawn to commodities for their potential diversification benefits, they may wish to mitigate some of the asset class's potential drawbacks -- such as short-term volatility swings and the unintended effects of frequent contract rolls," says Joseph Barrato, CEO of Arrow Funds. "With the launch of the Arrow Commodity Strategy Fund, we are pleased to offer investors a purer form of commodity exposure based on an index that was designed to address these issues."
The new Arrow fund targets the performance of the Longview Extended Commodities Index (LEX), a commodity index created by Longview Strategic Research (www.Longview-SR.com), calculated and published daily by Dow Jones Indexes. As a benchmark, the LEX is differentiated by its long-term view of the commodities markets and its use of far-dated futures contracts. Unlike other commodity indices, which tend to use monthly rolls of futures contracts one to three months out, the LEX follows an annual roll cycle of futures contracts that are 12 to 15 months away from expiration. As a result, the LEX results in longer-term holding periods with lower turnover.
"We think our index is a logical fit for a mutual fund and are happy to be working with the team at Arrow Funds," says William Albright, CEO of Longview. "Historically, our research shows the LEX's methodology has improved performance by reducing short-term volatility and the effects of contango and backwardation. In essence, the LEX was designed to align with the philosophy of commodity investors, not short-term traders."
The LEX methodology offers broad-based commodities exposure across six major sectors: energy, livestock, grains, softs, precious metals and industrial metals. Each of the 16 individual commodity components was selected based on its liquidity, economic relevance and long-term market viability. Unlike other indexes that determine their component weights by committee or computer optimization, the LEX weights are based on the price value of the underlying futures contracts. This market-weighted approach allows the index to perpetually adjust, in terms of real dollars, to the ever-changing global commodities markets.
"At Arrow, we are dedicated to providing unique portfolio solutions designed to help enhance returns, while mitigating risk," says Barrato. "As part of a diversified portfolio, we believe the Arrow Commodity Strategy Fund presents an attractive option for investors seeking to participate in rising global demand for commodities or for those seeking to hedge against inflation."
About Arrow Investment Advisors
Arrow Investment Advisors, LLC, the advisor to Arrow Funds, is an investment management firm dedicated to providing investment solutions, education and research to financial intermediaries. Arrow Funds identifies and develops investment products that seek to enhance returns and mitigate risk. The firm is committed to delivering superior performance while providing the highest level of customer service. To learn more, visit www.ArrowFunds.com.
Longview Extended Commodity Index (LEX) is a fundamentally constructed broad-based index for measuring the performance of the commodity markets. Unlike mutual funds, index returns do not include transaction costs, management fees or expenses. Longview Extended Commodity Index (LEX) is calculated by Dow Jones Indexes, the marketing name and a licensed trademark of CME Group Index Services LLC (CME Indexes). "Dow Jones Indexes" is a service mark of Dow Jones Trademark Holdings LLC (Dow Jones). The Arrow Commodity Strategy Fund, based on the LEX, is not sponsored, endorsed, sold or promoted by CME Indexes, Dow Jones or their respective affiliates, and CME Indexes, Dow Jones and their respective affiliates make no representation regarding the advisability of investing in such product(s).
An investor should consider the fund's investment objective, risks, charges and expenses carefully before investing or sending money. This and other information about Arrow Funds is contained in the funds' prospectus, which can be obtained by calling 1-877-277-6933. Please read the prospectus carefully before investing. Arrow Investment Advisors serves as investment advisor to Arrow Funds, distributed through Northern Lights Distributors, LLC (member FINRA). Northern Lights Distributors, LLC and Arrow Investment Advisors are not affiliated entities.
The Arrow Commodity Strategy Fund may not be suitable for all investors. The fund may not replicate the exact performance of the benchmark because of fees, expenses, trading costs and portfolio tracking error of the underlying investments. The fund may invest in commodity-related securities, which may be subject to greater volatility than investments in traditional securities. The use of derivatives such as futures, options, structured notes, repurchase agreements and swap agreements may expose the fund to additional risks than investing directly in the underlying securities. Using derivatives with leverage can magnify gains or losses. Fixed income securities and derivatives may fluctuate with changes in interest rates. The fund may allocate assets to an offshore subsidiary, which is not subject to the Investment Company Act of 1940. Changes in laws could result in the inability of the fund to operate as described in the prospectus. Performance may be affected by underlying costs associated with the subsidiary, which are not directly reflected in the fund's expenses. The fund charges a fee of 1.00% on redemptions of shares held less than 30 days. 0597-NLD-3/29/2011