"It is a mistake to assume that current volatility within the commodities sector is proof that the prolonged rally in commodity stocks is running out of steam," says Henderson.
"It is also misrepresentative to attribute it to a change in the basic fundamentals of supply and demand, which have historically resulted in such compelling returns for investors. In reality, it is the self-perpetuating irrational market sentiment in itself which is causing a sell-off for profit taking purposes, thus provoking a fall in prices. Despite this short-term volatility, we hold true to our belief that the long-term investment case is as strong as it ever was."
This view is shared by Bradley George, manager of the Investec Enhanced Natural Resources fund, although the manager points out that poor sentiment is currently having a greater impact than market reality.
"In our opinion the sharp pull back in resource equities is unjustified and overdone, given the potential cashflow generation by some of these companies, but right now fear has overtaken fundamentals," says George.
"The market requires more stability on the macro-economic outlook, as nobody cares about commodity supply constraints and certainty on demand is all that matters."
For Henderson, investors should stay with the sector rather than allowing wider economic fears to colour their judgement of the commodities sector.
"We would urge investors to focus, not on theory and speculation about the bursting of some mythical commodities bubble, but on the very real and tangible opportunities that are yet to be unearthed in this vast sector," he says.
As mature western markets continue to take a battering thanks to their exposure to the US and UK banking sectors, Henderson believes that commodities will remain sound thanks to their exposure to the emerging markets, which have been less affected by the bad news on Wall Street.
"To believe in the emerging markets story is to believe in the commodities sector. The strong appetite for commodities in the emerging markets' due to increasing populations and infrastructure growth is far from satisfied."
While George concedes that comodity prices have been affected by concerns about global growth, he feels that any pullback in parices has been overdone.
"While there is increasing focus on near-term demand destruction and reduction, we would note that the long-term fundamentals for global energy, metals and agriculture demand still remain robust with demand growth rates between three and six per cent depending on the specific commodity," he says.
"The industrialisation and urbanisation of the non-OECD, together with the replacement and upgrading of infrastructure in the OECD will continue to support steady long-term demand growth for global energy, metals and agriculture."
