Already a subscriber?Managers of resources funds believe the rally in commodity prices which kicked off last month marked the beginning of a new era for mining stocks, with a fresh crop of producers poised to fuel stronger returns this year.
Indeed, a growing number of resources funds are banking on copper as a key source of future returns, with Argonaut bolstering its exposure to the metal from 10 per cent of the portfolio to over 20 per cent. But co-portfolio manager of Ausbil’s resources fund, James Stewart, believes Pilbara’s short interest isn’t driven by large investors but rather a very broad range of smaller ones fuelled by a bearish view on lithium prices.
“We think most of that uncertainty has washed through now,” Mr Stewart said. “Commodity markets are now effectively back to bottom-up fundamentals which is really what drove our returns during the first couple of years of the fund when we performed strongly.”