The surge in natural resource demand driven by emerging market growth is set to continue, meaning natural resource equities will be a safe growth bet, according to Schroders.
The asset manager notes that emerging markets already account for half of global commodity consumption and predicts this proportion will increase in coming years.
Sam Catalano, fund manager of the Schroder ISF Global Resources Equity Fund, sees strong potential in copper, coal, iron ore and industrials with exposure to deep oil and mining infrastructure. “We are seeing ample growth opportunities at reasonable valuations driven by tight supply/demand balances,” he said.
The firm believes copper is a smart investment because of a supply squeeze caused by declining output at mature mines. Areas where there are new and large supplies, such as in central Africa, are subject to political risks.
The continuing success of many emerging economies is also driving demand for foreign capital. Investors are also pouring money into local-currency bonds to service a demand for capital in these markets.
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