MutualFundWire.com: An Oil Specialist Wants to Be Your Sub-Advisor

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Tuesday, August 27, 2013

An Oil Specialist Wants to Be Your Sub-Advisor

Kevin Miller wants to bring his long short oil strategy to a mutual fund near you.

Miller, who is managing member of 1900 Investments and owner of the advisory firm Miller Management is already in talks with a number of different potential clients in a number of different channels, including a mutual fund startup, a hedge fund in London, and a number of high net worth families.

Of course, he's thought about launching a mutual fund himself, but he admits that the skills related to promoting, selling and distributing a mutual fund are outside his sweet spot.

I have thought about it, but there is a lot of expense and costs related to launching a '40 Act product. There are many, many people who have much greater experience in distribution, who have spent their whole careers building up their expertise. To me, subadvising is the most efficient way to get distribution and it allows me to do what I want to do, which is to be the best at generating return from the oil markets.

Miller's two-year-old long short commodity strategy that invests in oil, going long as prices go up, shorting as it goes down.

The strategy is 80 percent quant and 20 percent discretion.

He started marketing it outside his firm roughly two months ago. He has also stated incubating two new strategies. He declined to give specifics on these strategies, but said that every offering his firm will run will be a long short offering on a single security.

Miller started in 1996 as a sales person for a large financial institution. Gradually over the last 17 years he started his own investment firm and now manages money for high net worth individuals on a separate account basis. In 2011, he started 1900 Investments to give access to alternate investments to my clients . The firm's first product was a private equity fund that launched in 2012. In 2013, its second offering was the "Long/Short Oil trading strategy", a liquid, low-correlated offering.

He had this to say about the strategy:

The strategy developed that has been back tested and has been "refined" to provide trading profits in both a long and short basis, originally for my clients. Over the 18 month incubation period, I realized that the oil trading strategy could benefit other investors and now we are launching the strategy nationwide to ultra high net worth , family office, fund of funds and registered investment advisors.

Miller said that since he made the decision to offer the strategy to outside investors, "we have received great reception from successful commodity trade advisors, brokers, hedge funds, investment platforms and small mutual fund companies. We are offering our strategy on a managed account and sub-advisory basis."

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