The ACDS Australian Natural Resources Fund will invest in 20-75 small and mid cap stocks typically with a market capitalisation of 450-$500m. It will typically hold 30-40 stocks and will be benchmarked against the S&P/Australian Stock Exchange 300 Resources Index.
Although Australia is the main focus Oceanic can also invest up to 30 per cent in global resources.
The fund. be run out of Perth, Western Australia by Nick Boyd-Mathews and Stuart Bell. Many of the regions mining and mining services companies are based in this area.
Bells background is in corporate finance and he will be responsible for the stock selection, analysis and due diligence, while Boyd-Mathews focuses on asset allocation, deal flow and the investment process.
The fund will be relatively unconstrained as the managers will invest wherever they see good opportunities. They can invest up to 50 per cent in any one sector, and can also take up to 50 per cent in cash when opportunities are scarce, a correction is likely or liquidity has dried up.
Oceanic says many global funds investing in natural resources hold the same stocks designed this fund as a performance kicker to bolt on to those funds. The fund will exploit price inefficiencies in the market and may find arbitrage opportunities where stocks are priced differently in other countries such as Canada.
The bull market in commodities which is being fuelled by demand from China could provide opportunities for this fund. Instead of investing in China, investors may want benefit from this trend by accessing what China needs through a fund located fairly close to China. The rise in commodity prices alongside companies which have the right technology starting new projects and becoming profitable could provide the opportunities this fund needs.
However, not only is the fund new, the company is also a new name in the UK market and IFAs may prefer to keep an eye on it for a while before they invest.