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90 West launches Global Natural Resources Fund
The current market represents one of the better investment opportunities in global resources in more than 30 years, according to 90 West executive chairman and portfolio manager David Whitten.
Whitten said the company launched the Global Natural Resources Fund this month to capitalise on opportunities created by increasing demand for minerals, energy and food in the world's largest populations.
"China, India and Brazil are still at an early stage of unprecedented economic growth. Even with relatively modest rises in GDP per capita, these populous countries will continue to have a huge long-term impact on natural resources demand - in particular minerals, energy and food," he said.
Whitten said softer markets meant shares in quality companies were available at attractive prices, and while the S&P global natural resources index had fallen 15 per cent, the fundamentals were still strong.
"Many company balance sheets were stretched around the peak of the market in 2007, but these have been repaired in the last few years and a new level of conservatism is in place," he said.
Some companies had found it difficult to fund projects leading to delays, although this was not necessarily negative, according to Whitten.
He said decreased supply could create discipline and the resources cycle could last longer than anticipated.
The Australian resources sector was highly concentrated - BHP and Rio Tinto owning over 56 per cent of the market, and Australian natural resources companies only represented 5 per cent of the global market, giving investors limited exposure, Whitten said.
"By market capitalisation, Australia's energy and agribusiness sectors are individually and combined less than 2 per cent of the global energy and agribusiness sectors," he said.
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