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
Retailisation of private markets such as evergreen funds may seem like appealing options for wholesale and retail investors, but providers risk undermining trust if their products are unclear.
Ethical investment manager Australian Ethical has seen its funds under management rise by a third over FY25 to close out the year at $13.9 billion.
BlackRock Australia’s head of intermediary distribution James Waterworth has taken up a new distribution role at an alternative asset manager, while Antipodes has hired a distribution director.
BlackRock’s iShares ETFs have reported a record first half for inflows, gaining US$192 billion in the past six months, to see overall ETF assets under management rise to US$4.7 trillion as it launches its first active ETF in Australia.
