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
Outflows from an Australian private markets fund manager have caused FUM at Pacific Current to decline by $1 billion in the last quarter.
Former RIAA chief executive Simon O’Connor has joined the ethical advisory panel at U Ethical Investors.
Financial services leaders are “all cashed up with nowhere to grow” when it comes to M&A activity, according to Deloitte, with 90 per cent saying they have strong balance sheets ready for an acquisition.
As fund managers are urged to diversify their product ranges, they are finding a faster way to do this is via an acquisition of existing firms but experts say it is not without potential culture clashes.
