Marlborough's ETF Commodity fund has cut its cash weighting to the lowest level since launch over thee years ago, on expectations of a strong recovery in the sector.
The £17.8m fund, which utilises a proprietary process to identify investment opportunities in commodity-related ETFs, has the capacity to retreat into cash if the system reveals a bleak outlook for the asset class.
Managers Nigel Baynes and Stacey Ash, from ETF specialist iFunds, took the cash weighting up to a record 84% during the market turmoil in September last year, but have reduced it to just 3% now.
Using the proprietary system, Baynes and Ash have been increasing exposure to a wide range of commodities - including crude oil, heating oil, gasoline and sugar.
Despite a tough first half of the year for most areas of the market, Baynes says commodities have been showing considerable strength recently as companies and governments look to lock into futures contracts in anticipation of rising prices.
"We are very positive on commodities and as a consequence our position in cash is at its lowest level since the fund was launched just over three years ago," Baynes says.
"What the data is telling us is that there is a broad recovery in the commodity asset class and that this is a sustainable recovery."
From launch in July 2006 to 1 September 2009, the fund has climbed 18.42%, according to Trustnet.
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