In my January 31st post, " No Inflation Huh..." I made mention of using the Rydex Commodities Fund (RYMBX) as a way to play the long term bull market in commodities.
A viewer had some doubts about the fund and its investment strategies. Here is the response from Rydex:
Subject: Commodities fund comments
1. The Rydex Commodities Fund does use a combination of swap and exchange traded futures contracts to gain exposure to commodities. While we did not have any exposure to the Refco situation, we do have counter-party risk inherent in our swap contracts just any other investment fund using swaps would have.
2. Rydex has an extensive due diligence and credit review process, managed by our Credit Review Committee, in place for the evaluation and constant monitoring of our counter-parties. This includes using only A1/P1 rated firms, the highest rating available.
3. The 1940 Act structure of our fund allows for the collateral for those swaps to be held by a third-party custodian, in our case, US Bancorp. Only a small amount of initial margin is held by the counter-party itself.
Rydex Investments
