Fund managers missing golden opportunity
Australian fund managers could be missing out on a golden opportunity by neglecting commodities and other global resource stocks, according to an industry review of the sector by Van Eyk research.
“Disappointingly, we found very few fund managers in Australia offer global commodities or resources investment products. Mostly this is because of lack of interest from investors during commodity price declines, but as this sector heats up perhaps that will change,” Van Eyk head of fund manager ratings Suzanne Tavill said.
The report says asset allocation to the commodities sector can be attractive in periods of financial stress, with gold in particular having a low correlation to traditional asset classes like equities and bonds.
According to the report, the average return of commodities has been “positive and competitive” over one, five and 10 year time horizons.
“Going forward, we’re confident of the longer term - three years plus - being a positive story for commodities. However, the strong run in commodity prices over the last two years suggests that their returns may be subdued in the medium term.”
Tavil says the outlook for commodities may also be clouded by slowing growth in the both the US and Chinese economies, which is expected to take place in 2005.
In the resource sector, the report found that the global resource investments offered the best opportunities for fund managers.
According to the review, the ASX300 Index has only about 60 resource stocks, and of these 43 had a market capitalisation of less than $500 million at 31 March 2004.
By contrast, the world’s key global resource index, the HSBC Global Mining Index, was found to offer far greater diversity with over 120 stocks, 11 of which exceed $10 billion in market capitalisation.
Recommended for you
AUSIEX has announced it will acquire FIIG, a specialist fixed income provider with $4.5 billion in funds under advice.
Platinum Asset Management has announced it is in discussions with a global alternatives fund manager regarding a possible merger to create an $18 billion firm.
Frontier Advisors has bolstered its Japanese footprint through a partnership with the $350 billion asset management arm of Nippon Life Insurance Company.
JP Morgan Asset Management has appointed an ETF specialist from Vanguard as it seeks to expand its ETF range.
