Natural resources offering inflation hedge
Funds focused on natural resources are among the best-performing funds over the past year as investors seek out protection in a rising inflation environment.
Over one year to 31 May, 2021, Terra Capital Natural Resources returned 130%, Tribeca Global Natural Resources returned 112% and Ausbil Global Resources returned 85%.
This was double the returns of the best-performing Australian equity fund, Sandon Capital Activist, which returned 57% over the same period.
Within FE Analytics’ Australian Core Strategies universe, the commodity and energy sector returned 30.8% over the period.
Commodities performed well in an environment of rising inflation and were seen as a way to ‘inflation-proof’ portfolios as the price of commodities such as oil and copper rose when inflation was accelerating.
The only commodity funds which lost money were gold funds with Perth Mint Gold losing 4.4% and VanEck Vectors Gold Miners ETF losing 2.2%.
In a recent report from Amundi, the firm said gold tended to operate in reverse to other types of commodities.
“On one front, being a safe haven, a positive economic environment is not supportive for gold. Yet, negative real interest rates with higher inflation have helped gold prices recover initial losses in the year and could further prolong this trend,” it said.
Recommended for you
There is one specific risk that is a significantly higher concern for financial services directors compared to companies overall and is impacting their risk appetite, according to the AICD.
Global fund managers are shunning bonds, with the asset class seeing the largest drop in allocations in more than 20 years.
Australian Ethical has seen its funds under management reach $10 billion, driven by organic customer growth and superannuation contributions.
Financial advisers will have access to private equity investments run by WTW for the first time as it launches a pooled fund to provide savers with access to traditionally institutional assets.