JPM Natural Resources Fund - Why dropping like a stone?

jabbahut40

Hi,

I originally invested in the JPM Natural Resources Fund between 2005-2008 however noticed that over the last few months in particular it has dropped like a stone. Any ideas why and do people consider this a good long term hold?

Thanks.

Jabba

dunstonh

its a very high risk fund. Ideally only around a few percent of your portfolio (depending on your risk profile - many wouldnt even have it). It is the sort of fund that if you dont know why it goes up and down, you shouldnt be in it. Commodity supply follows the economy. A slow down hits the fund. Growth in economy or forthcoming growth helps it.

Linton

The reason I consider it a reasonable very long term hold is that the increasing wealth of the emerging countries will result in increased demand for basic raw materials. In the shorter term the fund is very volatile as relatively small changes in demand caused by short term global economic fluctuations can cause major changes to commodity prices.

One thing I dont like about the fund is its 30% investment in gold and silver. I dont regard these as "raw materials" in any real sense and I would rather they werent part of the funds portfolio at all. But no matter what one's views on this are, 30% must be far too high.

benalder284

As well as the issues raised previously, it's also worth noting that even by commodity-fund standards this fund has a lot invested in small companies which further increases the volatility.

I hold it, but only at 2% of my portfolio - agree that long-term commodity cycle should be positive for producers as demand for certain raw materials will increase dramatically as consumer demand increases further in emerging markets; commodities also provide a further hedge against inflation.

sabretoothtigger

Gold and silver are used industrially but most often seen as a statement of wealth in some way. They do some kind of base worth beyond that though

Anyone with a mobile phone uses them both and a few rare earths too apparently

Commodity supply follows the economy

Alot of these shares are living in the shadow of China because they use up so much, any great jump or fallback in their diet send these shares or fund even flying.

Copper has been awful recently just when I hoped it might do better and at the same time allegedly China is limiting house building.
If every Chinese family lived in a house similar to western standards there would be no copper left available for years into the future, they literally swamp the market and communism by nature of its dictats' makes it a bipolar market

do people consider this a good long term hold?

Yes. Very high volatility but if your in thirties (ie willing to invest) so long as you agree in the premise, I cant see why you'd sell after a fall

deadpeasant

I take it the same sort of thing that's been said above also applies to First State Global Resources?

Jegersmart

jabbahut40 wrote: »

Hi,

I originally invested in the JPM Natural Resources Fund between 2005-2008 however noticed that over the last few months in particular it has dropped like a stone. Any ideas why and do people consider this a good long term hold?

Thanks.

Jabba

I am just buying it actually. Basically, this is a resources fund (oil, gas, mining, metals etc etc) and these sectors have been hammered relatively hard for the past few months (longer actually, but more gently) - but more so on the mining side. We have mining stocks seemingly forming a base to rise from - the HUI index is showing signs of the same so I am hoping the next few months should see a strong bounce.

I guess you are still considerably up if you you bought these back then so you might want to hold unless you have a stronger case for an investment you want to move your money to.

It *is* a volatile fund but if you are 20+years from retirement and this is a pension holding you would be crazy NOT to hold some of these funds, and crazy if you only hold a few percent. Of course if you have a 5 year horizon and saving for a deposit on a house then this fund *may* not be for you unless you know what you are doing.

GL
J

Jegersmart

deadpeasant wrote: »

I take it the same sort of thing that's been said above also applies to First State Global Resources?

Similar fund, but there are always going to be people who tell you that if you invest more than 0.1% in a HIGH RISK fund like this then you are going straight to hell. It all depends on your aims, but be advised this is a volatile fund in case you are looking short term and need the money.

J

utigers

I have just started buying into the FS one this year. Didnt have any exposure until now, I buy out of favour areas/sectors which I believe this is at the moment.

These are volatile sectors but if you buy in slowly at lowish points you should do ok in the long term.

sabretoothtigger

deadpeasant wrote: »

I take it the same sort of thing that's been said above also applies to First State Global Resources?

BHP BILLITON 10.00%


Sure I like them, I was commenting on commodities generally. Seems fine at a glance

XSTRATA 5.20%

About to become Glencore, will be one of the largest firms in the world? Then he has exxon and Vale. The guy loves his megacorps alot, JPM is more diversified looks like

gozomark

sabretoothtigger wrote: »

BHP BILLITON 10.00%


Sure I like them, I was commenting on commodities generally. Seems fine at a glance

XSTRATA 5.20%

About to become Glencore, will be one of the largest firms in the world? Then he has exxon and Vale. The guy loves his megacorps alot,

without knowing the benchmark of the fund, its impossible to tell if he likes the shares you mentioned or not.