Wed, 04/10/2006 - 07:00
The new manager of the USD 263m Baring Global Resources Fund, Jonathan Blake, is making changes to the way the fund is run by giving it an increased focus on absolute return.
Blake has been a part of Baring Asset Management's (Barings) emerging markets team since 1996 and back-up manager to the Fund since 2004. He has been shifting the fund's focus away from relative to absolute return in order to take advantage of a greater number of investment opportunities within the resources sector.
Blake said: 'The move towards an absolute return strategy will allow us to take greater advantage of the cyclical nature of the asset class. While we remain very positive on the long-term performance of the asset class, the right strategy will allow us to use derivatives to help generate returns as well as to protect against any downside and mitigate risk.'
Barings expects the fund to be UCITS III compliant by the end of the year. This will allow greater use of derivatives with the aim of reducing market risk and accentuating returns. The Global Resources Fund will have a concentrated portfolio of around 30 to 45 stocks. The fund is positioned according to the manager's conviction and not relative to a benchmark.
Blake continued: 'We are increasing the conviction within the portfolio to take larger positions on the best ideas in the asset class. The mix between large cap, small-mid cap, and emerging markets stocks will change as conditions dictate. We have recently reduced the exposure to small cap stocks as, in more volatile markets, these stocks tend to under perform given that there is not the appetite for additional risk'.
'Going forward we prefer base and precious metals to energy, and are now focusing on fourth quarter prospects. We believe that a combination of renewed consumer buying and base metal supply restrictions are likely to underpin a rally in commodity and equity prices.'
Over recent months the fund has seen some very strong net inflows, more than doubling in size since the start of 2006. Jonathan Blake, lead manager and Clive Burstow, resources analyst, together bring over ten years' investment expertise and industry knowledge to the management of the fund.
The objective of the Fund is to achieve long-term capital appreciation through investment in a diversified portfolio of the securities of commodity producers, being companies engaged in the extraction, production, processing and / or trading of commodities such as oil, gold, aluminum, coffee and sugar.
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