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A wealth of resources for Oceanic

Oceanic Aset Management

ACDS Australian Natural Resources Fund

Type: Oeic

Aim: Growth by investing mainly in small and medium sized Australian companies involved in mining, extraction or the processing of natural resources

Minimum investment: Lump sum 2,000

Investment split: At least 70% in Australian natural resources stocks and cash, up to 30% in global natural resources stocks

Isa link: Yes

Pep transfers: Yes

Charges: Initial up to 4%, annual 0.65%, performance fee 25%

Commission: Initial 3%

Contact: www.oceanicasset.com.au

The ACDS Australia Natural Resources Fund from Oceanic Asset Management will invest in 20-75 small and mid cap stocks typically with a market capitalisation of 450-$500m. It will be benchmarked against the S&P/Australian Stock Exchange 300 Resources Index and although Australia is the main focus, it can also invest up to 30 per cent in global resources.

Discussing the market suitability of the fund Hargreaves Lansdown investment manager Ben Yearsley thinks this fund could provide an interesting addition to the other commodity funds on the market at the present time. He says: ” This is much more specialised than the majority of other commodity funds and as such is probably not suitable for the majority of investors.”

Yearsley points out the fund will invest mainly in commodity companies in and around Perth in Western Australia. “There are very specific risks involved with this fund that could make it the best fund over 12 months or the worst in terms of performance,” he says.

One of the good things about this fund in Yearsleys view is that the total expense ratio is low, due to the majority of the managers return coming from a performance fee/. “Another good feature of it is that the company is capping the fund at 50 million. This is because it is looking at the smaller end of the market and does not want to be constrained with what it can buy.”

Considering the potential drawbacks of the fund Yearsley says: “There is nothing to actually dislike about the product. It is very clear in what it will do – you either like the idea or you dont.”

Scanning the market for possible competitors Yearsley says: “I dont see any real competition as this is a niche product within a wider theme. If you bought the First State Global Resources fund as an example, it would be very unlikely that the Oceanic fund would have any cross holdings as the majority of these investments will be much smaller companies.”

Summing up Yearsley says: “As I alluded to earlier, this fund will either be one of the best performing over the next 12 to 18 months or one of the worst. It is very niche and very specialised and is not suitable for everyone. It is something I have considered as a personal investment to add extreme spice to my portfolio but I think you have to treat it with caution if recommending it to clients. Having said that I do quite like the look of it.”

BROKER RATINGS

Suitability to market: Average
Investment strategy: Good
Adviser remuneration: Average
Charges: Good

Overall 7/10

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