Armajaro Asset Management

LLP (Armajaro Comm. Fund)

Fund Investment Objectives

The trading strategy of the ARMAJARO COMMODITIES FUND utilizes the extensive commodities trading experience of John Tilney and the investment team. The investment strategy includes trading long/short directional, spread and volatility trades using exchange traded futures and options on all commodities except cocoa. The trade ideas for the strategy originate from a combination of fundamental and technical analysis. The Portfolio Manager, John Tilney, has vast experience in successfully interpreting the price impact of fundamental factors on commodity markets gained from over 25 successful years of trading commodities. In depth knowledge of markets is also strengthened from a wide network of contacts that the team has built throughout their careers. In addition to his commodity trading expertise, John has built a support team of 7 trading professionals, each with their own areas of expertise in commodity trading and analysis to help to develop trading strategies and add a broad range of knowledge to the investment team. The fund does not trade in equities, fixed income or foreign exchange..The decision-making process is discretionary and can be described in the following manner: The first step is to examine and establish whether the macro economic fundamentals are bullish, bearish or neutral for each of the underlying commodity sectors. The second step is to look at the microeconomics for the underlying commodity within the sectors to determine if we will be bullish, bearish or neutral. The third step is to examine the technical indicators on each underlying commodity and to determine whether there is an important technical point (such as lows, highs or break outs) that will support the manager's fundamental views. The final element is market sentiment, which can sometimes be used as a contrarian indicator..The strength and alignment of the fundamental and technical indicators determine the manager's level of conviction in a particular trade idea. For instance, if macro and micro economic indicators suggest a course of action which is reinforced by the technicals and contrarian sentiment indicator, then the manager may implement a more aggressive directional position. The types of trades entered into depend on market conditions. The trades may be characterised as the following: Directional Trade - aims to represent the manager's view. The trade will be entered following extensive research on factors affecting the price of the commodity. Relative Value/Spread Trades - aims to exploit changes in commodity forward curves. Commodity forward curves are a by product of the physical supply and demand situation for a particular commodity and will determine whether the commodity is in contango or backwardation. The fund aims to exploit variations, anomalies and changes in the forward curves of commodities.