Investec GSF Global Natural Resources Fund (the "Fund") is a sector equity mutual fund. The Fund aims to achieve long-term capital growth primarily through investment in equities issued by companies around the globe that are expected to benefit from a long-term increase in the prices of commodities and natural resources. At least two-thirds of the companies invested in will be involved in mining, extracting, producing, processing or transporting a natural resource or commodity or will be companies which provide services to such companies.
Key risks of the product:
- Sector risk - The Fund invests in a small number of sectors (i.e. the commodities and natural resources sectors) which may subject it to greater volatility than a more broadly diversified portfolio. The sectors may decline even while broader based equity market indices are rising. The Fund offers exposure to commodities and may include additional risks e.g. political risk, natural events or terrorism. This may influence the production and trading of commodities and the value of financial instruments offering exposure to such commodities.
- Concentration risk - The Fund invests in a concentrated portfolio of holdings compared to a typical fund with a similar investment mandate and therefore may be more volatile than more broadly diversified funds.
- Derivatives Usage Risk - The Fund may use derivatives for the purposes of hedging and/or efficient portfolio management ("EPM"). In adverse situations, the Fund's use of derivatives may become ineffective in hedging and/or in EPM and the Fund may suffer significant losses.
In the worst case scenario, the value of the Fund may be worth substantially less than the original amount you invested and in an extreme case could be worth nothing.
Investors should not only base on this material alone to make investment decisions. Please refer to the Fund Prospectus for the details of all risk factors.
Factors favouring the natural resources sectors:
- Global economic recovery stimulates demand for commodities and natural resources.
- Rapid industrialisation and urbanisation of emerging markets and infrastructure upgrades in western countries.
- Political and environmental factors hinder exploitation of new supplies.
- Large scale mining and resources companies with strong balance sheets, strong cashflow, low debt level, relatively higher dividend yield are undervalued.
- The Fund is not benchmarked and is actively managed. It is not bound by any country or single sector restrictions.
- The Fund can invest in 62 types of natural resources, including conventional and renewable energy, base metals, precious metals and agricultures.
- In addition to resources equities, the Fund can also invest in ETCs, which have higher correlation with commodity prices.
- Portfolio is concentrated on 30 to 60 equities with high quality.
- The Fund can use sector indices or equity derivatives for risk management purposes.