Oil and mining still dominating resources space
While much focus has been paid to energy-efficient materials and companies, the best gains from commodities funds are still to be found in funds focused on oil and mining.
According to FE Analytics, the best-performing fund in the Australian core strategies commodity and energy sector over one year to 31 October, 2021 was BetaShares Crude Oil Index ETF which had returned 132%.
This was followed by BetaShares Global Energy Companies ETF, which included firms such as Chevron and Exxon Mobil in its top 10 holdings, which had returned 76.9%.
In third place was Terra Capital Natural Resources which returned 63%, a fund which focused on small and mid-cap global mining and energy companies.
The Australian core strategies commodity and energy sector had returned an average of 21.9% over the period.
One of the factors contributing to this outperformance was the soaring price of commodities in the third quarter which allowed miners to triple their year-on-year dividends. In particular, BHP was likely to be the world’s biggest dividend-payer in 2021, contributing $25.6 billion.
Daniel Sullivan, head of global natural resources at Janus Henderson, said: “Massive changes are reshaping the industrial economy, and these factors are expected to accelerate into 2030 and continue to at least 2050. Prime among these changes is the transition from fossil fuels to renewable energy.
“Starting with coal and now oil, soon natural gas will also be given diminished investment attention, higher carbon abatement hurdles and operators will need to dramatically change their businesses to thrive in the long-term.”
He said new areas for energy managers to focus on in the future would include copper for electrification, raw materials used in batteries, renewable energy and agricultural and food science for healthy, sustainable food.
The Janus Henderson Global Natural Resources fund had returned 41.6% over the period.
AUTHOR
Laura Dew
Recommended for you
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.
