Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a600344

Long-term investors eye ‘bombed-out’ resources stocks

Neil Gregson, manager of the £2.2 billion JPM Natural Resources fund, is confident that hard-hit share prices are 'reaching the bottom'.

 
Long-term investors eye ‘bombed-out’ resources stocks

It’s a ‘bombed-out sector with bombed-out valuations’, but long-term investors are starting to creep back into resources companies, says Neil Gregson, the manager of the £2.2 billion JPM Natural Resources fund.

Gregson, who took over the Citywire Selection fund from Ian Henderson at the start of this year, inherits a fund which has underperformed its benchmark over the past year, with a -30.5% return. However, the fund has outperformed historically, up 27.3% over three years. 

The fund’s underperformance coincides with a sell-off in commodities amid growing concerns about the state of the global economy, particularly Europe's unresolved debt crisis, the shaky US recovery and China's slowing growth. Resources equities have fallen at the same time.

‘Nobody is recommending the sector – all strategists are defensive, there’s plenty of bad news out there, and it’s all in the price. We would certainly look forward to some healthy improvements in the future,’ Gregson says.

While reluctant to call the very bottom, Gregson said on a conference call that ‘it feels like were bouncing along the bottom here now – there are signs of life,’ including growing M&A activity in the sector.

‘Value investors are now coming back into the resources sector, mainly out of the US and Canada that recognise the macro issues but also recognise deep value – there is some broad, long-term fundamental money coming in. That with M&A activity means there is a sense of reaching the bottom.’

But he said that, like all equity market sectors, resolution is needed over Europe’s crises before shares can really rally.

In particular, Gregson – a former mining engineer – believes the large outperformance of the gold price over gold equities will narrow. ‘Gold shares are very cheap, probably the cheapest they’ve ever been in past 30 years.

‘We put a bit more into gold sector in the spring months’

Gregson is willing to bet some of his children's inheritance that the fund’s performance will turn: ‘I bought some more units for my kids – I do feel that confident we’re going to make some money.’

Citywire’s Frank Talbot recently interviewed Gregson on camera. Watch the video here.

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire guide to investment trusts

In association with Aberdeen Asset Management

Fund managers from Standard Life Investments quizzed on investment trusts


What can SLI bring to the table for those who want to put their money into investment trusts?

More about this:

Look up the funds

  • JPM Natural Resources A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Neil Gregson
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

Two MPC members vote for interest rate hike

by Daniel Grote on Aug 20, 2014 at 09:57

Sorry, this link is not
quite ready yet