The Tribeca Global Natural Resources Fund has been ranked the number one performing hedge fund in all strategies globally in the 2017 Preqin Global Hedge Fund report.
The fund is a long/short global natural resources fund focusing on large liquid opportunities in equities, credit and commodities. The fund’s investible universe includes hard rock commodities, energy, soft commodities and the service providers and infrastructure that wrap around these three groups.
Ben Cleary (pictured), co-portfolio manager, says 2017 is also looking to be a promising year for the fund.
“Despite a broad based selloff in global bonds, the Trump presidency and growing inflation expectations dominating markets in the fourth quarter, we remain net long the global natural resources sector,” Cleary says. “All three of these factors should be tailwinds for the sector in their own right in coming quarters and years.
“The first quarter of 2017 is likely to see year on year headline inflation globally in large part because we are cycling USD25 oil.
“Even if asset allocators don't turn into outright sellers of bonds, higher inflation should force them to shorten the maturity of their portfolios by selling the back-end and buying the front end.
“History tells us that cyclical equities outperform when the back end yield increases,” he says.
Craig Evans, co-portfolio manager, says the Trump election saw the biggest sector dispersion moves in 20 years, resulting a large sell-off in defensive yield equities in November.
“Expectations of fiscal stimulus drove a rotation into everything from investment banks to cement producers,” he says. “While the potential going forward for US commodity consumption growth isn’t that exciting – with 1 per cent global copper consumption growth expected for every USS1 trillion of US fiscal stimulus – it is a different story globally.
“Should we see other G20 countries follow in President Trump’s footsteps – a particularly strong possibility with Japan – then in aggregate there could be significant consumption growth at a time when most commodities are already in market deficit thanks to years of under investment in new supply.
“From a positioning perspective, we are still comfortable that the materials sector is not a crowded trade.
“While finding value is undoubtedly harder following the rally in 2016, we remain long the natural resources sector but have reduced our net exposure to the lowest level in the past 12 months.”
The Tribeca Global Natural Resources fund is approaching a level to soft close. Both Cleary and Evans are investors in the fund and have committed to re-investing 100 per cent of all performance fees paid, back into the fund for the next five years.
The Tribeca group manages assets of well over AUD2 billion overall, with more than AUD1 billion invested in hedge fund strategies.
