Natural Resources Funds

lemon26

Good morning all,

I'm just wondering aboutthe recent rapid growth that I've seen in the natural resources fund in my portfolio (JPM Natural Resources A Acc) and if it's sustainable or just another bubble? I think that as the world gets out of recession that there should be more demand for resources as output picks up but is it sustainable for the longer term?

The fund is back where it was before the crash which is doing pretty well, and I've made 17% on this fund since starting my portfolio - obviously it's quite volatile so would taking the profit to one of the more stable funds I hold be better, such as Artemis Strategic Assets or M&G Global Growth?

Thanks for your time and your thoughts, L

sabretoothtigger

The fund is back where it was before the crash which is doing pretty well

Thats not really true. If your fund is priced in sterling and the value of sterling has fallen then the fund is not back to pre crash value

The applies to commodities especially but also to other things priced in pounds too

Artemis has shorts on various things he thinks will fall but he is long gold I believe. Yes I think its sustainable but I dont know where the final price will be

grubby23

should it be the other way around? If Sterling has risen, then the gain should be less than when having a constant exchange rate?

In other words, you should invest in funds that are priced in Dollars for instance, only when the pound is strong to the Dollar and
not the other way round?!

wombat42_2

I have a slug of Investec Enhanced Natural Resources
http://www.h-l.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/i/investec-enhanced-natural-resources-p-accumulation

It is much less of a scary ride than JPM Nat Res.

Nat resources have excellent long term potential over the next 10 years or so but they are more volatile than most investments

sabretoothtigger

grubby23 wrote: »

should it be the other way around? If Sterling has risen, then the gain should be less than when having a constant exchange rate?

In other words, you should invest in funds that are priced in Dollars for instance, only when the pound is strong to the Dollar and
not the other way round?!

Its confusing I know that much.


It doesnt matter what its priced in that much. Commoditys are traded world wide and everyone wants them so they are a currency I think


I think of it like a see saw. The actual movement might well be zero if one side of the value rises as the other falls so we have value of sterling and value of copper only if they both rise at the same time can we say its a gain. If sterling falls 20% and the price of copper £ rises 15% then we've not made money.

Same thing with houses but all the arguments on here dont seem to accept this, house prices are rising for these reasons imo and will keep doing so most likely




I have that one Wombat, its either very balanced or a bit disappointing. Hasnt gone far in the little time Ive held it

wombat42_2

sabretoothtigger - your response prompted me to scrutinise Investec Enhanced Natural Resources and it has performed badly in the last few weeks in particular. For example, it looks like they short oil at the same time as they invest in oil stocks. But instead of switching to JP Morgan Natural Resources fund i am switching to Investec Global Gold.

sabretoothtigger

I remember the short strategy, they are trying a form of arbitage which I dont totally disagree with

Its possible this fund is quite absolute rather then heavily following commodity prices. I deliberately wanted an actively managed fund so Im not so bothered about it.

Also we have consider then the british pound has recovered well since March 1st falls so in this context commoditys will not appear so profitable. I think 4% improvement in currency has occurred


Short oil and long stocks is an attempt to capture the value of oil reserves held by big oil companies and gain dividends and so on - I saw them explain in a vid I think

Oil hasnt been that weak though, oil companies have done ok so that would match the funds zero gains I guess


Looking to buy some more traditional commodity fund at some point, I will look at those two you mention!