Terra Capital repositions its resources portfolio to capture ongoing growth
A move into a number of specialist industrial metals has helped boutique investment manager Terra Capital maintain the strong momentum of its Natural Resources Fund in the New Year.
Towards the end of last year, Terra Capital repositioned the fund’s holdings to capture opportunities in lithium, which is used in batteries and heat-resistant ceramics, cobalt, also used in the production of batteries.
The Terra Capital Natural Resources Fund invests in global listed small to mid-sized mining and energy companies.
Jeremy Bond, founder and chief investment officer of Terra Capital, says: “We are now sitting with what we think present the best opportunities for significant capital growth over the next six to 12 months.”
The fund produced a one-month return of 8.01 per cent in January, compared with a 2.94 per cent return for the S&P/ASX Small Resources Index over the same period. This follows a return of 50.17 per cent for the fund in the 12 months to the end of December.
“Our portfolio breakdown in terms of commodities is leveraged to the parts of the commodity complex that have performed well and we think will continue to perform well,” Bond says.
“Lithium and cobalt continue to perform well and our positions in gold are now delivering good performance.”
January was a strong month in commodity markets. Bulk metals added to recent gains, with iron ore reaching its highest level since 2014, finishing the month at $83.50 a tonne. Crude oil prices were firm.
Precious metals were strong, with platinum and palladium both rising nine per cent in the month, followed by silver (up six per cent) and gold (up three per cent).
In the industrial metals market, the price of copper rose 5.2 per cent and aluminium 5.4 per cent. The nickel price fell 3.4 per cent.
“This month’s result is in some ways validation of what we have been saying for some months. The market’s rotation away from defensive businesses over the past six months has continued and has gathered pace,” Bond says.
