Manulife's commodity fund with a difference

The Manulife Global Fund-Global Resources Fund, the feeder fund, invests in individual stocks rather than structured notes or futures contracts.

Another feature that distinguishes this fund is that it is diversified into three different sectors - oil and alternative energy, gold and precious metals, and basic materials - said Alan Kam, chief executive of Manulife Asset Management Thailand.

The allocation could vary from a maximum of 43 per cent to a minimum of 23 per cent, said Societe Generale Asset Management's Raphael Dubois, who manages the fund for Manulife Global.

The fund's high flexibility means it could theoretically avoid the cyclical nature of commodities.

Barely a year since its launch last January, the feeder fund has posted returns of 31.53 per cent in US dollar terms.

Expectations of the US Federal Reserve ending its easing stance and a subsequent strengthening of the greenback may have dampened commodity prices for the moment, said Dubois.

He believes the commodities rally was only in the beginning stage.

He said US oil consumption last year was at 25 barrels per head, while China was at two barrels. The Thai average was five barrels. For the bulls of China and India, consumption is expected to soar further.

The gold rush earlier this year - with prices breaking US$1,000 (Bt31,710) an ounce last month - may have left many stunned. But the feeder fund has been quick to take profit.

Dubois said it was now underweight in gold and precious metals, now standing at just 28 per cent, with 38 per cent in materials and 34 per cent in oil and energy.

The fund tries to steer clear of accidents. Its main holding is in Agnico Eagle Mines, at 3.6 per cent last month. Agnico is a company based in Canada and has mines in Canada, Finland and Mexico.

The remaining gold companies are Kinross Gold, Yamana Gold and Goldcorp.

The Toronto-based Manulife's resources fund is invested in many Canadian firms, which make up 63 per cent of the 67 stocks in its portfolio.

If the names above sound un-familiar, that is because the fund manager is looking for relatively small companies with "high-volume growth". For instance, Nexen, a Canadian oil and gas company which more than tripled its earnings per share from 0.36 Canadian dollars in December 2007 to C$1.17 last month.

The company has also invested in uranium producers, preferring nuclear energy over biofuels.

"We hear everyday now about drawbacks … driving lots of inflation," said Dubois.

The Thai fund will launch its initial public offering from May 9-15.