Close Investments has scrapped its Agricultural Commodities Trust just days before it was due to go live.
The firm says “general market sentiment and the sub-prime issue” means there has been insufficient demand for it to proceed with the fund, which was set to go live on Friday.
Roland Kitson, sales and marketing director at Close, says the decision will in no way affect the rest of the firm’s Commodities range, which include the £65m Close Enhanced Commodities fund, adding Close may revisit the abandoned trust in the New Year.
He was unable to disclose the amount of investment it had received to date in the product. The offer closed on Monday.
“We have decided not to proceed,” Kitson told IFAonline.
“Demand is simply not sufficient to have operated it in the way we would have liked. It’s nothing to do with the sector, but more to do with the general market sentiment and the sub-prime issue.
“It’s something I hope we can revisit in the New Year but right now it is just not possible for us to ensure it meets its full potential.”
The product was set to be split equally between wheat, red wheat, sugar, corn and soybeans in a bid to exploit a growing supply and demand dynamic for agricultural commodities.
It was set to offer investors 125% of the growth in the basket of commodities with unlimited upside and 85% capital protection.
Upon announcing the product’s launch, Kitson told investors the trust offered an “exciting opportunity” to access the sector.
“We’ve witnessed the high levels of growth of industrial metals, oil and gold – the fundamentals suggest that we are on the cusp of similar growth for agricultural commodities and we believe now is an excellent time to invest,” he explained.
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