Advising clients on when to buy into funds based on investment themes is a perennial problem for advisers – too early and you risk waiting years for a pick-up, too late and you have missed the boat.
In its agriculture fund, one of the few retail funds looking solely at soft commodities, Eclectica believes it is ahead of the posse on a theme that has the potential to harvest big returns. Worldwide food demand is growing, fuelled by economic growth. Add population growth and consider the scarcity of supply and the investment opportunity becomes clear.
And that is not even considering rising living standards in emerging markets which demand better nutrition, and the accelerated development of biofuels. The winners of this should be soft commodities like corn and grain which have lagged behind the hard commodities boom.
The fund’s manager George Lee takes an expansive approach, looking at global equity oppor-tunities in the agriculture supply chain from logistics and machinery down to water supply, fertiliser and crop protection. Early numbers look impressive – the fund is up by 22.53 per cent since launch last June. Fees are a little above the norm with an AMC of 1.75 per cent but not unusual for a specialist fund. We do consider this fund high risk but there is a compelling case to having this fund occupy a small proportion of a client’s portfolio.
Darius McDermott is managing director of Chelsea Financial Services