Value oriented
Focused on considerably undervalued opportunities that we believe present favorable returns at an appropriate level of risk
Risk focused
Specialist investment team with experience evaluating, managing, and monitoring unique risks inherent in global natural resource equities
Active and concentrated
A benchmark agnostic, actively managed portfolio consisting of 25 to 40 names across geography and market capitalizations
We believe natural resource equities can provide unique characteristics not readily available in a traditional portfolio. We consider natural resource equities to include energy, industrial metals and mining, precious metals and mining, agricultural, protein, forestry, timber, renewables, and companies involved in other physical materials. As a result of their inherent cyclicality, natural resources markets are inefficient and subject to frequent dislocations that could be capitalized on by long-term investors following a patient, value-driven approach.
Diversification
- Natural resource equities can provide diversification benefits because they tend to show lower correlation to traditional bond and equity portfolios.
Inflation protection
- Compared to traditional equities, bonds, and even other real assets, natural resource equities can show increased sensitivity to unexpected inflation.
Active management in a multicomponent industry
- Natural resource equities combine distinct subsectors, each with separate and independent cycles that can be navigated by specialized and experienced natural resource equity investors.
Access to Macquarie's network of experts
- Investment team engages colleagues across the Macquarie network to tap into global industry specialists and commodity experts to support bottom-up analysis and top-down views.
Fundamental value-based process that marries top-down thematic trends and commodity supply and demand with bottom-up company analysis.
Develop broad market and macro-economic framework:
- Fundamental value-based process that marries top-down thematic trends and commodity supply and demand with bottom-up company analysis
- Factors considered when reviewing broad economic conditions include global and national gross domestic product (GDP), Purchasing Managers’ Index (PMI), unemployment, and results from other surveys and data points
- Fundamental and geopolitical conditions include central bank policies, yield curve, credit spreads and fiscal policies
Identify thematic trends and commodity supply/demand
- Establish insights on industry dynamics, emerging technologies, and other factors such as demographics and substitution or sustainability efforts, to determine views on industry trends
- Investigate factors impacting specific commodity supply and demand curves, such as regional and global inventories, trade flows, curve structure, sentiment, and cost curve
Conduct in-depth fundamental research
- Analyze company filing, presentations, management history, drivers of performance and other data points to formulate stock-specific views
- Establish upside and downside targets for the business based on conservative assumptions using cash flow analysis, earnings models, asset values, and other methods
Construct portfolio and manage risk
- Build a portfolio of 25 to 40 positions based on an upside / downside enterprise value framework with a consideration of market cap, liquidity, and relevant risk exposures
- Monitor and manage risk at the overall portfolio level and individual security level
- Maintain a strict sell discipline based on factors such as target price, thesis realization, opportunity cost analysis, and management actions
For more information on our equity capabilities
Risks
The value of the portfolio may fall as well as rise, and you may not receive back the amount invested.
As a class, equities carry higher risks than bonds or money market instruments.
International investments entail risks including fluctuation in currency values, differences in accounting principles, or economic or political instability. Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility, lower trading volume, and higher risk of market closures. In many emerging markets, there is substantially less publicly available information, and the available information may be incomplete or misleading. Legal claims are generally more difficult to pursue.
Narrowly focused investments may exhibit higher volatility than investments in multiple industry sectors.
Because the strategy expects to hold a concentrated portfolio of a limited number of securities, the strategy’s risk may be increased because each investment has a greater effect on the strategy’s overall performance.
IBOR risk is the risk that changes related to the use of the London interbank offered rate (LIBOR) or similar rates (such as EONIA) could have adverse impacts on financial instruments that reference these rates. The abandonment of these rates and transition to alternative rates could affect the value and liquidity of instruments that reference them and could affect investment strategy performance.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis, and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and can be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Strategy’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries. These disruptions could prevent the Strategy from executing advantageous investment decisions in a timely manner and could negatively impact the Strategy’s ability to achieve its investment objective. Any such event(s) could have a significant adverse impact on the value and risk profile of the Strategy.
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