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High energy

Investec Asset Management has become the latest firm to answer the product innovation call this week by launching a natural resources fund with full Ucits III capabilities.

The commodity and resource equity vehicle will be managed by the head of global commodities and resources Bradley George and will trade on a daily basis.

George will tap into a universe of around 30 commodities and 800 natural resources stocks. These include energy, metal, mining and agriculture companies, while the Ucits III structure will allow long and short positions in the portfolio. A move the group say will offer a better risk/return balance.

Investec’s commodity team has already seen a busy 2008 after the group hired two sell-side analysts from Goldman Sachs in to replace Tim Guinness on its global energy fund.

Mark Lacey and Jonathan Waghorn became co-portfolio managers to manage both the global energy fund and the offshore version.

Investec say the fund the launch is backed up by the belief that the market is currently in a long-term secular growth cycle for commodities, the rationale for which is based on demand from emerging economies and the developed world.

Investec managing director, UK distribution David Aird says: “Many IFAs in the UK have bought into the commodity story and client flows have been high. However, we strongly believe that clients will welcome a fund with a total return objective, one which provides them with some protection in falling markets, whilst at the same time generating attractive returns over time.”

Meanwhile, Jupiter has also announced plans to add to its own vast product range with a strategic bond fund on June 2, 2008.

The fund will target a yield of 7 per cent, and will work on a “go anywhere” approach, with the ability to switch from a conservative to aggressive stance should manager Ariel Bezalel wish.

Bezalel says the fund will have a focus on European credit with a minimum of 20 per cent of the fund in high yield instruments.

As with a number of his peers, Bezalel believes opportunity is rife, with valuations particularly attractive in the investment grade space.

He says: “The investment grade market is pricing in a severe recession and the high yield market is pricing in a sharp rise in defaults. Whilst I am cautious on the economic outlook, current valuations seem to offer potentially handsome rewards for the risk. This situation, in my view, presents the most compelling investment opportunity in credit we have seen for many years.”


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