Fidelity’s Lodha: Oil values are unsustainable

Fidelity’s Amit Lodha is positioning the global real asset securities fund in anticipation of a falloff in oil prices.

Speaking at the Fund Strategy Investment Summit in Kitzbuhel, the manager of the £130.3m fund describes the current oil valuations as ’unsustainable’ at a time when Brent crude is trading at its highest levels since April 2010.

Brent crude is currently trading at $122 a barrel – up 15 per cent on the year and the highest since prices climbed above $125 towards the end of April last year. By the beginning of May, a sharp falloff had hit the markets, taking valuations to below $110 a barrel.

WTI Crude climbed above $105 yesterday, similarly reaching the highest levels since April last year and shortly before it underwent a less severe correction.

In anticipation of a decline in these valuations, Lodha is preparing to shift the focus of the fund to concentrate on beneficiaries of lower oil prices such as airline companies.