JPMF hikes exposure to base metals firms
Fund manager JP Morgan Fleming has built up its holdings of companies in the base metals and energy sectors at the expense of firms in gold because of strong demand for their products from emerging markets.
Ian Henderson, who runs the JPMF Natural Resources Fund, said growing demand for base metals and energy would be reinforced by low inventories and lack of investment in capacity.
The fund sees gold as a defence against the economic cycle and has cut its exposure to companies in this sector to around 19 percent from around 50 percent at the end of 2002 because it is positive about future economic growth.
The Natural Resources Fund manages 230 million pounds -- a 630 percent increase over the last two years.Companies in the base metals and diversified sector account for 27.7 percent from 16 percent at the end of 2002, and energy firms for 36.7 percent versus 24 percent.
"There is a structural change going on," Alistair Sayer, client portfolio manager at JPMF told Reuters."Data from the London Metals Exchange shows inventories are likely to hit 15-year lows. There's been structural underinvestment for a long time ... People haven't allowed for increased buying of raw materials from emerging markets."
The top two investments in the Natural Resources Fund are in Canada -- 4.4 percent in First Calgary Petroleums and 2.3 percent in First Quantum Minerals.
The fund has 2.1 percent of its money in Brazil's Companhia Vale do Rio Doce, 2.1 percent in Canadian Natural Resources and 2 percent in London-listed miner Xstrata.
(From Reuters, November 17, 2004)
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