Natural Resources Fund

mopat_3

Can anyone suggest a decent Natural Resources Fund; had a quick scout around and it appears JPM, Blackrock and Investec all have similar.

Will obviously do my own research into them, but wondering if anyone has any views on the respective fund managers or providers.

Looking to add this sector to my S&S ISA for this tax year.

barny_100

I recently did the same research around Resources funds to provide some diversification so for my S&S ISA. My 2p worth from that:

Investec has a performance charge which I don't like for obvious reasons so I discounted that. I also looked at Marlborough ETF Commodity Fund (Thanks to a poster on here) which I liked the sound of due to the fact it's invested directly in commodities rather than the companies. However it is fairly new and small fund (Same goes for Investec actually) which can be a risk and it's gone down around 12% since last October during which all the other Resouces funds seemed to have done well which is a bit odd. Still interested for the future though and will keep an eye on this - would be easier and more diverse than buying some commodity ETF's myself! Blackrock was too gold-centric for my tastes plus the long standing fund manager is on a break till sometime in 2010.

Anyway after all that I plumped for JPM Natural Resources as it seemed to be an all rounder with a track record of good management. You pays your money and you takes your chances. £50/month regular saving so I'm relaxed about short term performance.

tradetime

ETF wise, you may want to look at GSG
Alternatively if you want a fund that has a capped exposure to any one commodity, and a lighter than most exposure to oil GCC, though you may have trouble getting it with numpty UK brokers, also there's Powershares DBC

Fair disclosure, I own shares in GSG.

mopat_3

I recently did the same research around Resources funds to provide some diversification so for my S&S ISA. My 2p worth from that:

Investec has a performance charge which I don't like for obvious reasons so I discounted that. I also looked at Marlborough ETF Commodity Fund (Thanks to a poster on here) which I liked the sound of due to the fact it's invested directly in commodities rather than the companies. However it is fairly new and small fund (Same goes for Investec actually) which can be a risk and it's gone down around 12% since last October during which all the other Resouces funds seemed to have done well which is a bit odd. Still interested for the future though and will keep an eye on this - would be easier and more diverse than buying some commodity ETF's myself! Blackrock was too gold-centric for my tastes plus the long standing fund manager is on a break till sometime in 2010.

Anyway after all that I plumped for JPM Natural Resources as it seemed to be an all rounder with a track record of good management. You pays your money and you takes your chances. £50/month regular saving so I'm relaxed about short term performance.

I undertook very similar yesterday and also plumped for the JPM Fund.

wombat42_2

I personally much prefer Investec Enhanced Natural Resources
http://www.h-l.co.uk/funds/security_details/sedol/B2QVXH8

over JPM Natural Resources. The fact that it is a smaller fund isnt necessarily bad as it can be more nimble and easier to manager.

The Investec Fund includes agriculture, shorting and some direct commodity holdings. The JPM fund has none of those. Also, I think that the Investec fund is less volatile than the JPM fund. The JPM fund got absolutely slaughtered last year, down about 57%.

I also like the Marlborough ETF Commodity fund
http://www.h-l.co.uk/funds/security_details/sedol/B195JD8
as it will actively manage ETF allocations for you. Also, although its remit is to consistently beat the commodity CRB index, which it consistently has, it can put up to about 50% into cash which it did late last year and saved much of last years carnage.This fund smooths out much of the volatility of commodities.

barny_100

wombat42 wrote: »

The Investec Fund includes agriculture, shorting and some direct commodity holdings. The JPM fund has none of those. Also, I think that the Investec fund is less volatile than the JPM fund. The JPM fund got absolutely slaughtered last year, down about 57%.

Fair point but as a new investor you could say that big loss last year makes it a buying opportunity now? Also the performance charge is a real turn off for me with Investec.

I also like the Marlborough ETF Commodity fund
http://www.h-l.co.uk/funds/security_details/sedol/B195JD8
as it will actively manage ETF allocations for you. Also, although its remit is to consistently beat the commodity CRB index, which it consistently has, it can put up to about 50% into cash which it did late last year and saved much of last years carnage.This fund smooths out much of the volatility of commodities.

I owe you anyway for mentioning this fund on here as I do like the look of it's investment methods. However, quite a big however actually, it's performance in the last 6 months is rather puzzling. I can understand if it was under performing due to it's cash holdings, the flip side being as you say they helped it over perform during the big falls last year, but it's actually lost nearly 10% in the same time the other 2 funds have come back 40-60% from their bottoms?

wombat42_2

barny_100- Yes the Investec performance fee is an annoyance but not a showstopper for me. But on the other hand the Investec fund is "Enhanced" meaning it has more diversity and flexibility than the JPM fund.

The reason the Marlborough fund has not done so well this year is that equities have done well so far this year but pure commodities have been generally fairly flat. But it could be the other way round anytime in the future.

mr_fishbulb

barny_100 wrote: »

Fair point but as a new investor you could say that big loss last year makes it a buying opportunity now?

It could also suggest that the JPM fund manager was less able to position against the falls and possibly not as good as the Investec one?

wombat42_2

mr_fishbulb wrote: »

It could also suggest that the JPM fund manager was less able to position against the falls and possibly not as good as the Investec one?

I think the main reason is the JPM fund is more volatile than the Investec fund - the Investec fund allows shorting and is a more diverse fund.

So the potential gains may be higher with JPM but also the risks.

mr_fishbulb

wombat42 wrote: »

I think the main reason is the JPM fund is more volatile than the Investec fund - the Investec fund allows shorting and is a more diverse fund.

So the potential gains may be higher with JPM but also the risks.

Hi Wombat. I know you've had a big interest in the commodity related funds. Where do you do all your research?

Do you spend much time looking at funds in other areas, or is this where you concentrate your efforts?

Hope you don't mind me asking, but I want to beef up my knowledge this sort of stuff.

Hatone

I reckon commodities will do well when the market recovers, and increased demand for metal, food and oil will push up the value of commodity prices. Though I can't forsee this happening for at least 6 months, providing the uptrend stabilities.