Baring Asset Management has revised the make up of its flagship Global Resources Fund, placing new emphasis on mining, chemicals, oil and gas, and ending its exposure to precious metals.
Duncan Goodwin (pictured), Barings' recently appointed head of global resources, tells Funds Europe he has made a series of portfolio changes as he seeks to ensure the fund is driven by company, not macro, events.
Barings recently stated it preferred investment in the equities of resources companies rather than physical commodities. It also altered the benchmark of the fund.
The top ten holdings for the fund have changed. Since February, the top three holdings have been Chevron, Total SA and Exxon Mobil, rather than BHP Billiton, Rio Tinto and Exxon. New additions to the top ten have included Royal Dutch Shell, Weyerhaeuser, PPG Industries, Kinder Morgan and Oil Search.
Sectors and geographies for the fund have also changed under Goodwin, who joined Barings in January this year and was previously the lead manager on the Martin Currie GF Global Resources Fund. He replaced Jonathan Blake who left Barings at the end of November 2013 to take time off.
Goodwin says: "We see better opportunities in a number of sectors ranging from mining, to agriculture to chemicals and have increased our weightings here accordingly."
The fund's weighting towards chemicals almost doubled, increasing from 7.5% in February to 14.2% in June. Metals and mining now represent 15.7% as a new introduction, while the 28.4% exposure to base metals in February, and 6.2% in precious metals, were removed.
Geographically, the UK weighting decreased from 29.6% to 24.9% and Japan was taken out altogether. The allocation to 'others' increased significantly from 6.8% to 14.8%.
Goodwin says: "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 by decreasing the number of investments held in our portfolio."
The fund posted a 7.3% return for 2014 to date, compared to a loss of 8.6% across the past three years.
Barings has been investing in resource-related equities for nearly 20 years and manages more than US$900 million (€670.84 million) in a range of different strategies in the asset class.
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.
Goodwin says: "We believe the new composite benchmark is more representative of the increasingly diverse opportunities in the resources industry and will allow us to take full advantage of the investment themes we identify as well as giving us scope to reduce the economic sensitivity of our portfolio."
He hopes these alterations will also help to ensure consistent alpha generation and reduce the volatility associated with the metals and mining sectors.
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