Fund Review: Energy funds struggle amid oil price volatility



BlackRock Natural Resources Growth & Income

This £50m fund, run by Tom Holl, Skye Macpherson and Alastair Bishop, targets stocks in three major sectors: energy, agriculture and mining. The team invests globally with no restrictions, and starts by taking a view on commodities such as oil, base metals and forestry, focusing on price direction and sector risks, before looking for companies likely to benefit from its outlook. The resulting portfolio is usually made up of around 50 stocks and has returned 6.5 per cent in the three years to June 27.

BlackRock New Energy 

BlackRock announced Robin Batchelor was retiring from managing its energy funds at the end of 2015 with his departure seeing Mr Bishop take over this $1.1bn (£876m) fund. The manager focuses only on new energy stocks, with the investment universe consisting of solar, hydro and wind power-generating companies. The fund also includes firms involved in emissions reduction, power and smart grids, energy infrastructure and storage. The process combines company analysis with an overlay of broader trends in the industry and the economy as a whole. The vehicle has delivered a relatively impressive 41 per cent over three years. 


Investec Enhanced Natural Resources  

Investec’s George Cheveley and Tom Nelson, who manage this £80m fund, believe resource prices in the short term are driven by supply and demand imbalances. The team forecasts underlying price trends in commodities, and invest in shares of global companies expected to benefit from these forecasts. The team also invests in direct commodities through derivatives, preferring equities, and targets companies where the share price does not fully reflect the underlying commodity price. The duo have returned 5 per cent over three years, but 40 per cent in the past 18 months.