Investors should not shy away from exposure to commodities in their portfolios because there are plenty of reasons to expect sustained growth in the sector, says multi-manager provider T.Bailey.
Its fund managers have committed to investing another £0.8m into the JPMorgan Fleming Natural Resources Fund, which they feel will continue to build on its near 85% absolute return since mid-August 2002.
”In particular we understand that there are a number of structural industry issues causing severe shortages of supply. Thus is particularly the case with nickel and copper”
While fears of a government-imposed slowdown in the Chinese economy may be well founded, demand for commodities there is also linked to infrastructure, not just manufacturing. Thus, while the taps may be turned off somewhat, big bridge or road-building projects cannot be turned off quickly, and demand for commodities used for such projects will remain high.
Meanwhile, what slack China gives, the US may take up as the economy there has moved into what Federal Reserve chairman Alan Greenspan terms a self-sufficient recovery not requiring additional monetary or fiscal stimulus.IFAonline
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