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Luxembourg Fund Selectors Forum 2011<br />Patrick Pittaway<br />Portfolio Manager, URAM<br />14 April 2011<br />www.uram.c...
Overview<br /><ul><li>The outlook for commodities
Strategies for alpha generation
Passive strategies (optimised roll returns, index composition, etc…)
Active strategies
Equities as an alternative?
A case study for gold
The best of both worlds: flexible funds (commodity and equities) </li></ul>2<br />
The outlook for commodities<br />Demandfundamentals<br />Industrialization of the emerging world is a unique oppportunity<...
Over 700 million people will eventually move to urban areas
India needs to pursue an urbanisation program on a scale similar to China (250m people by 2030).  $600bn has been allocate...
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Patrick

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Transcript of "Patrick"

  1. 1. Luxembourg Fund Selectors Forum 2011<br />Patrick Pittaway<br />Portfolio Manager, URAM<br />14 April 2011<br />www.uram.ch<br />
  2. 2. Overview<br /><ul><li>The outlook for commodities
  3. 3. Strategies for alpha generation
  4. 4. Passive strategies (optimised roll returns, index composition, etc…)
  5. 5. Active strategies
  6. 6. Equities as an alternative?
  7. 7. A case study for gold
  8. 8. The best of both worlds: flexible funds (commodity and equities) </li></ul>2<br />
  9. 9. The outlook for commodities<br />Demandfundamentals<br />Industrialization of the emerging world is a unique oppportunity<br /><ul><li>Unprecedenteddemandfrom the emerging world
  10. 10. Over 700 million people will eventually move to urban areas
  11. 11. India needs to pursue an urbanisation program on a scale similar to China (250m people by 2030). $600bn has been allocated over the next 5 years
  12. 12. New demandfrominvestors
  13. 13. ETF : Financial innovation opens commodities up to a broad range of investors
  14. 14. Loose monetary policies in developed world favour investment in Gold and real assets
  15. 15. Green technologies trigger renewed interest for strategic metals
  16. 16. Mining presents a unique opportunity to benefit from the inflection point in alternative energy technologies</li></ul>3<br />
  17. 17. The outlook for commodities (2)<br />Supply constrained <br /><ul><li>Physical constraints such declining grades and greater depth means greater costs and require increasingly greater sovereign risk
  18. 18. Given the challenges associated with growth, many companies prefer to acquire rather than grow organically</li></ul>4<br />
  19. 19. Strategies for adding alpha<br />Passive: top four commodity indices<br />Active: commodity selection<br />5<br />
  20. 20. Equities as an alternative<br />Gold mines have neverlookedso attractive<br />6<br />
  21. 21. Equities as an alternative (2)<br />Margins and cash flow at record level<br />Gold industry cash margins<br />Cummulative free cash flow (2010-2015)<br />Source : NBF<br />Source : Merill Lynch<br />7<br />
  22. 22. Equities as an alternative (3)<br />Number of mergers/acquisitions in gold sector<br />Price paid and gold price<br />8<br />
  23. 23. Equities as an alternative (4)<br />Alpha and beta in the gold sector, continued<br />Stock picking adds significant alpha<br />Life cycle of a mining stock (relative value)<br />Emerging index<br />Intermediate<br />Junior<br />Commodity<br />Senior<br />Source: Bloomberg, Chart URAM<br />9<br />
  24. 24. Best of both worlds<br />How to achieve a long-term performance above that of gold?<br /><ul><li>Understand the arbitrage opportunities between precious metals and the equities of gold mining companies
  25. 25. Benefit from the alpha available from the active management of gold shares
  26. 26. Stock picking is a priority
  27. 27. Where possible, minimise the volatility of gold mines
  28. 28. Without using leverage</li></ul>10<br />
  29. 29. Best of both worlds (2)<br />Summary<br />“Top down” analysis to determine opportunities and risks<br />Stock selection<br />11<br />
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