The Fund's investment objective, over a recommended investment period of more than five years, is to outperform its benchmark index, with exposure to commodity and energy-linked stocks.
April saw high volatility on commodities prices. Brent crude began the month at $52/bbl, hit a high at $56/bbl, before closing at $51/bbl, influenced in part by US air strikes on military bases in Syria, and the risk of a growing tensions in the region. Opec members raised their quota compliance levels in March to 104%, showing very strong commitment to a reduction of global oil stocks. The International Energy Agency thus expects oil stocks to fall over the coming months. The trend is nevertheless for an extension of Opec and Non-Opec production cuts in order to reduce stocks to their historic average. A decision will be taken on May 25. Geopolitical tensions have also fuelled volatility in the gold price. It ended down after hitting a five-month high at $1295/oz. Coal price volatility is related to Cyclone Debbie, which temporarily impacted production in Australia, the world's largest coal exporter. Iron ore prices have stabilised above $60/tonne after dropping 30% in two months, while traders are worried about credit-tightening measures in China and their impact on properties demand. These fundamentals, not very promising over the short-term, led to a correction in the energy sector - E&P and oil services in particular - as well as metals and mining, including gold; while chemicals and wood/paper were rising. Such fairly widespread decreases led to a -2.8% index correction, and a rather sharper one to the fund, at -5.8%, despite our high cash level (close to 8%). Among the main contributors to this decline were stocks in these sectors, in particular Anadarko, Fortescue, Oasis Petroleum and Patterson-UTI. Gains posted by International Forest Products, International Paper and Oceana Gold were not enough to offset this. Nevertheless, we remain confident in the sector's free cash-flow generation capacity as a whole, while companies remain cautious about industrial investment and are focused on improving shareholder return.
(1) The rating grades the funds on a scale from 1 to 7. This rating system is based on the average fluctuations of the net asset value over the past five years. It corresponds to the variation range of the portfolio upwards and downwards. If the net asset value is less than 5 years old, the rating is determined by other regulatory calculation methods. Historical data such as those used to calculate the rating may not be a reliable indication of the future risk profile. The current category is neither a guarantee nor an objective. Category 1 does not signify a risk-free investment.