Although equities have rallied recently, commodities stocks have remained out of favour throughout.
Our data shows that the FTSE All Share Mining index is down 4.88 per cent over the last year, while the FTSE All Share index is up by more than 24 per cent.
Performance of indices over 1yr
Source: FE Analytics
Many industry experts, such as Charles Stanley Direct’s Rob Morgan, have called the sector the last remaining contrarian play given current market valuations.
However Becket, manager of the Psigma Multi Asset Dynamic fund, says he is maintaining his exposure to the sector as he believes its long-term outlook still looks good. "We typically invest in eight to 11 different asset classes in the fund.
"We are quite sector-agnostic as we’re all about diversification. We will always have something in equities and despite the challenges facing bonds, do hold fixed income," he said.
"However, unlike a lot of our peers we still like commodities."
"We have chosen two funds for our commodities exposure, one of which is Investec Enhanced Natural Resources."
"The fund is run by George Cheveley and Bradley George and I think they are the smartest commodities team going. They have managed to skirt around the recent disastrous period of commodities relatively unharmed."
Cheveley and FE Alpha Manager George have managed the £192m Investec Enhanced Natural Resources fund since its launch in May 2008.
According to FE Analytics, over that time the fund has returned 10.43 per cent while its composite benchmark – 50/50 split between the MSCI ACWI Materials and MSCI ACWI Energy indices – has returned 7.45 per cent.
Performance of fund vs benchmark since May 2008
Source: FE Analytics
The fund has underperformed against its benchmark in the short term.
Nevertheless, it has lost considerably less than similar funds – such as JPM Natural Resources – over recent times.
Becket says there are a number of key reasons why Investec Enhanced Natural Resources has managed to weather the storm over the last few years.
"One of these is their ability to go short, which they have used well throughout the cycle," he explained.
"They have performed well given the massive polarisation between the prices of different commodities."
The fund’s biggest short positions are currently in steel and iron ore.
Becket continued: "They have had very good stock selection over the years and have worked their risk budget well at certain points by using derivatives. I just don’t think there is a better team out there."
Cheveley and George run a portfolio of 105 holdings, with basic materials and industrials its highest sector weightings.
Investec Enhanced Natural Resources makes up 2.51 per cent of Becket’s £20m Psigma Multi Asset Dynamic fund.
The fund requires a minimum investment of £1,000 and has an ongoing charges figure (OCF) of 1.68 per cent.
"The other fund we hold in the commodities sector is First Sate Global Agribusiness. The supply-and-demand outlook for agriculture looks very attractive going forward," Becket said.
"Changes to the world’s climate and an ever-increasing population mean the capital returns from the sector are potentially very high and we think that the First State Global Agribusiness fund is one of the best options to capture them."
"By holding this fund we are also giving ourselves a degree of inflation protection," he added.
The £50m First State Global Agribusiness fund was launched in May 2010. It has returned 33.13 per cent over this time while the IMA Global sector has made 30.11 per cent.
It is co-managed by Renzo Casarotto and Skye MacPherson.
Performance of fund vs sector since May 2010
Source: FE Analytics
The fund comprises 57 holdings with the majority of the portfolio positioned in North America.
First State Global Agribusiness makes up 2.11 per cent of Becket’s fund. It has an OCF of 1.92 per cent and requires a minimum investment of £1,000.
Becket says that although buying gold miners would be a contrarian investment at the moment, he prefers leaving the decision of whether to hold them up to the experts in that field.
"We use ETFs for our gold bullion exposure as I think gold equities will keep getting cheaper. Also, I would prefer to use a manager like Bradley George to make the call on gold for me, to be honest."
"I think that gold bullion is a good diversifier for a portfolio, but with gold equities you are obviously still getting equity risk. I don’t think they are a suitable investment at the moment," he said.
"I wouldn’t say now is a potential buying opportunity for gold as I would expect a further shake-up in the gold price over the coming months."
"However, if gold were to drop below $1,300 then that might present a better investment," he added.
Becket has run his Psigma Multi Asset Dynamic fund since its launch in September 2008.
Since then, it has returned 43.13 per cent while the IMA Mixed Investment 40%-85% Shares sector has made 37.79 per cent.
Psigma Multi Asset Dynamic has an OCF of 2.53 per cent and requires a minimum investment of £10,000.