The fund invests globally in the stocks of 50 to 100 companies involved in mining or mining related activities. It will invest in firms that mine base and precious metals but not in firms involved in the production or extraction of oil and gas.. It will invest in companies of any size that can grow their reserves and production and will also include undervalued mining firms.
Fund manager Neil Gregson joined the company in September 2010 from CQS Asset Management. He is a qualified mining engineer with over 27 years’ industry experience, including almost 20 years at Credit Suisse where he was head of emerging markets, managing gold and natural resources funds. When running the JPM fund, he will use research from the firm’s natural resources team, which identifies undervalued mining assets through 1,000 company meetings a year.
JPMorgan says opportunities in the mining sector are driven by supply and demand issues. Regions such as China need commodities to grow, but labour and skill shortages, along with rising costs of extracting the raw materials, has led to limited supply that is unable to meet rising demand. These factors have led the mining sector to perform well in the last two years, which could lead advisers to feel this fund is coming to the market too late. However, JPM does not believe it has run out of steam and says there are still good reasons to invest.
Commodity prices can be highly volatile and investing only in the minor sector is a narrow focus, so this fund would suit investors who can accept higher risks in return for potentially high returns. However, IFAs and their clients who want an open-ended mining fund rather than an investment trust such as BlackRock world mining trust may see the experienced team as a comfort factor.