A resources fund run from Sydney by a 30-year veteran of the sector has become one of the few funds available to Chinese retail investors under the QFII regime.
The ING Investment Management resources fund, run from Sydney by Vik Pitrans using inputs from around the globe, has been distributed in China for the past two months through a joint venture with the China Merchants Group.
The chief executive officer of ING IM, Steven Billiet, who spent four years running the manger’s Taipei operations before heading to Sydney late last year, said the resources fund was one of only “13 or 14” funds available under the Chinese Government’s ‘QFII’ regime, which allows retail investors to access funds of foreign assets.
ING IM is not the only manager to detect the potential offshore audience for a resources fund managed from Australia.
Perpetual Investments yesterday formally lauinched its Global Resources Fund to investors after three and a half years in incubation. The fund’s portfolio manager, James Bruce, believed the importance of domicile was “diminishing rapidly” and that his team could often identify better value in Australian stocks offshore – the London-listed version of BHP being an “excellent case in point”.
He added that investment options in Australia had been limited through ongoing consolidation, and more recently the proposed introduction of the Resources Super Profits Tax.
“Increasing supply side constraints, the rapid growth in emerging markets specifically in Asia and the global demand for raw materials over the past five years has created significant financial returns for resource companies, all of which continue to drive long-term opportunities for investors in this sector,” Bruce said.
“However, the returns have also had the affect of masking a number of fundamental issues in the Australian mining industry such as skilled labor shortages, rapid
increases in capital costs, acute restrictions around infrastructure and delays to project approvals.”
“We believe that if the Government’s proposed Resources Super Profits Tax is introduced, these issues will be exacerbated. The tax would also undoubtedly curb the investment and export of Australian commodities and significantly lower the value of Australian resource companies in the medium and long-term.”