We asked John Berry, Co-Founder and CEO of Pathfinder Asset Management, to shed some light on their Commodity Plus Fund. Here is what John had to say about the recent performance of the fund and how the fund operates:
“Another solid month for commodities and a strong one for the Pathfinder Commodity Plus Fund. Momentum is gaining in what appears to be a young vibrant bull market when compared to the decade-old equity run-up. After a strong first quarter +5.2%, the fund returned an additional 5% during April.
The fund operates by actively allocating between six commodities and can also move to cash to avoid large drawdowns. It has had a significant overweight to the energy sector (ranging between 60-70%) during the recent run-up, outperforming the Bloomberg Commodity index by 11.7% over 1-year.
Since hitting 14-year lows in January 2016 of $28.35 crude oil has more than doubled, now trading at $70. Three factors have been driving the energy run up:
- Inventory levels: This is how much oil is held in the stockpile and is used to smooth out supply and demand. Reduced inventory levels means less ability to smooth out demand fluctuations
- Increasing demand: Synchronised global growth has resulted in increased demand for commodities. With long supply chains for increased production increasing demand often leads to higher prices
- Geopolitical risk: President Trump has pulled out of the Iran Nuclear deal and is looking to impose sanctions. Iran, OPEC’s third largest producer will struggle to get supply to the market adding further pressure to an already tight market. Any instability in the Middle East could disrupt the flow of oil to global markets. As well, the US relationship with North Korea remains unstable and the risk of a global trade war remains high”
Read more here more about Pathfinder and their range of funds available on InvestNow.
Co-Founder & CEO
Pathfinder Asset Management