Thursday 23rd October 2014
slib33
WEDNESDAY TICKER: OCTOBER 22ND 2014: The governor of the Bank of England, Mark Carney, has launched a probe into the causes of yesterday’s disruption to Real-time gross settlement (RTGS), the bank's system for settling high value payments - A major loophole in the UK’s criminal records checking system means that IT staff, including those working in critical functions within financial services firms are not permitted to be vetted for fraud, says Simon Culhane, Chartered FCSI and chief executive officer of the Chartered Institute for Securities & Investment (CISI) - Employment in financial and related professional services in London reached a record high of 703,900 in June 2014– 11%, according to TheCityUK’s October 2014 London Employment Survey - LSE-backed multilateral trading facility Turquoise has launched Block Discovery, a new service designed to allow users within the Turquoise Midpoint Dark Book to trade larger block orders by matching block indications - Dominic Wheatley will take up the job of chief executive of Guernsey Finance as of December 1st. Wheatley will replace Fiona Le Poidevin, whose resignation was announced in July and who will head up the Channel Islands Stock Exchange.

Barings backs resources sector equities over commodities

Tuesday, 05 August 2014
Barings backs resources sector equities over commodities Resources sector equities are currently more attractive than direct investments in physical commodities and investors should focus on investing in ‘companies not commodities’ to benefit from an increasing global demand for resources, according to Baring Asset Management (Barings). http://www.ftseglobalmarkets.com/

Resources sector equities are currently more attractive than direct investments in physical commodities and investors should focus on investing in ‘companies not commodities’ to benefit from an increasing global demand for resources, according to Baring Asset Management (Barings).

The opportunity in resources equities is as strong as it has been for several years, believes Barings.  Its positive outlook is based on the size of differential between what it sees as positive company specific drivers versus a negative – often macro driven – consensus view. 

The firm has been investing in resource-related equities for nearly 20 years and manages more than $900m in a range of different strategies in the asset class. 



 “After several years of a benign-to-negative commodity pricing backdrop and associated de-rating by shareholders, companies are finally taking action to improve margins and returns driven by self-help and or restructuring,” says Duncan Goodwin, head of Global Resources at Barings.

“To capture this market shift, we are putting more emphasis on the bottom-up element of stock selection and increasing the level of stock conviction in the Baring Global Resources Fund.  That means a reduced emphasis on top-down portfolio construction with more risk taken at the stock level and reduced macro factor risk. 

“We are increasing the level of stock conviction by decreasing the number of investments held in our portfolio. With the right analysis, we believe it is possible to target investment opportunities offering superior returns and better prospects for positive earnings surprises.”

Since March this year, the Baring Global Resources Fund has been tracked against a new composite benchmark, represented by a 60% weighting to the MSCI AC World Energy Index and a 40% weighting to the MSCI AC Materials Index. 

The benchmark broadens the investable universe of stocks in the Materials space beyond solely Metals and Mining to include subsectors such as chemicals, construction materials, containers and packaging and paper and forest products.

In addition to oil and gas production, the processing, marketing, storing and transporting of hydrocarbons is becoming an increasingly important factor for investors as countries and regions look to secure a stable and competitive source of energy to sustain economic growth.

Barings believes valuations for resources companies are currently trading below historical levels and look set to revert to their long term mean – making them very attractive for active investors with a strong understanding of the sector.  On a longer term basis, continued population growth will drive absolute demand for natural resources, energy production and raw materials, which, in turn, will create growth opportunities for resources companies throughout the value chain.

Goodwin adds: “Over the very long term, we are adamant that resource equities retain a valuable role in investment portfolios.  As commodity prices are closely correlated with rises in consumer prices, investment in the resources sector has the potential to act as a hedge against inflation.  We believe the opportunities in the sector are as strong as they have been for several years and expect a positive re-rating of the sector and associated gains for our resources fund irrespective of the macro.”

Related News

Related Articles

Related Blogs

Related Videos

Tweets by @DataLend

DataLend is a global securities finance market data provider covering 42,000+ unique securities globally with a total on-loan value of more than $1.8 trillion.

What do our tweets mean? See: http://bit.ly/18YlGjP

White Paper

Seeking Optimal ETF Execution in Electronic Markets

Seeking Optimal ETF Execution in Electronic Markets

 
pdf Download PDF View all Whitepapers