As more of the worlds inhabitants move out of poverty it is likely that until alternatives can be developed and distributed on a commercial scale, energy prices will remain in an upward trajectory for sometime. Also, the debate in to a solution to the energy crisis is only starting to take shape.
Over the past couple of years, energy prices have generally risen strongly, helping boost the profits of many companies in this sector. This is driven by growth in emerging economies.
Additionally, global exploration success is a fraction of that enjoyed in the 1950s and 60s and current discoveries are unlikely to be extracted for at least another 10 years — where technology permits — limiting the growth of energy supplies and fuelling future price rises.
The Investec Global Energy fund aims to identify and benefit from those companies ideally placed to support the increasing demands for energy.
The two fund managers, Mark Lacey and Jonathan Waghorn, take both an economic view, considering factors such as supply and demand, and a stock selection approach to picking investments. Individual stock selection is driven by the managers' belief that resource company share prices are driven by five characteristics over time: capital management, valuation, earnings, asset quality and sentiment.
The fund primarily invests in companies that are involved globally with exploration, production, distribution of oil and gas or other energy sources, or companies which service the energy industry.
Investors should note that we regard an investment such as this as higher risk, given its sole focus on energy, and should therefore only constitute a small proportion of a well diversified portfolio.
Performance of fund verus benchmark over 3yrs
Source: FE Analytics
The £242m portfolio has returned 33.68 per cent, underperforming its MSCI World Energy benchmark by around 7 per cent. Lacey and Waghorn took over as managers of the fund in March 2008.