Raw new fund: Will market bite?

The Rogers Raw Materials Fund, using an index of 35 categories of commodities, could be slightly ahead of its time. With just $3 million invested since it was rolled out to retail investors two months ago, it might be polite to say that the fund is still flying beneath the radar screen of the financial planners who are expected to sell it.

Obviously, commodities investing is not for everyone. But as the equity markets continue to disappoint, the idea behind the Rogers fund is that eventually those intermediaries directing client assets will find some value in what is the world’s third-largest market.

The fact that the index fund has gained 2.6% so far this year – against losses of 12.2% by the Nasdaq Composite Index and 4.7% by the Standard & Poor’s 500 stock index – might also help investors better appreciate the world’s supply-and-demand imbalance when it comes to raw materials.

Beeland Management Co. LLC in Chicago, which has an institutional version of the index fund in addition to the fund it offers retail investors for a $10,000 minimum, believes it is mining a virtually untapped market.

Clyde Harrison, managing partner at Beeland, thinks retail investors will lead the charge into commodities. However, he admits there are challenges to get brokers and planners at a comfort level that will enable them to use commodities as an allocation tool.

“I think retail is going to be a big market for this fund,” he says. “The beauty is, there is virtually no allocation right now.”

Mr. Harrison points out that commodities indexes historically generate annual returns of about 8.5% – without moving in tandem with the equity markets.

Loudcloud is quiet

Loudcloud Inc.’s humbling initial public offering last week says one of two things about Marc Andreessen, the company’s chairman and highly regarded co-founder of Netscape: He is either really optimistic or he forgot that it isn’t last year anymore.

The company, described as an Internet infrastructure company, had cut its IPO price and increased the number of shares offered twice since October, finally settling on 25 million shares at $6.

Unfortunately, the $150 million in proceeds from the stock sale isn’t expected to last the year, considering that the company lost $58 million in the quarter ended with October on $4.5 million in revenues.

“It’s hard to see how they’ve raised enough money through this IPO,” says Marc Baum, CEO of IPO.com.

Mr. Baum adds that the relatively weak appeal by the market to Loudcloud proves that “star power” is no longer enough to turn investors’ heads.

“This is the kind of company that, if not for Andreessen, I don’t think it would have found a market willing to invest,” Mr. Baum says. “I think it comes down to the fact [that] hardly anybody knows what this company does. Last year that would have been OK, but this year there’s almost no appetite for companies that don’t show a sustainable revenue model.”

Questions, observations, stock tips? E-mail Jeff Benjamin at [email protected].