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Alternative Market Briefing

Natural resources investors mull exposure to a wider spread of regions in 2020

Thursday, April 23, 2020

Laxman Pai, Opalesque Asia:

The fund searches and mandates issued by natural resources investors in Q1 2020 suggest a more cautious approach to the coming year, revealed Preqin in its Quarterly Update on Natural Resources.

The majority (53%) of fund searches are for commitments of less than $50mn to the asset class. That said, more investors issued mandates for larger sums of capital in Q1 2020 than in Q1 2019, said the report.

In a time of extended public market volatility, this could be a sign that investors are becoming more comfortable with natural resources as the need to diversify their portfolios becomes ever more pressing.

The geographic spread of fund searches also hints to a more diversified approach; appetite for almost every region has increased in the past year.

The largest share of mandates issued in Q1 is targeting investment in Europe; in fact, a greater proportion of mandates now target European exposure (54%) than global exposure (45).

The proportion of fund searches targeting Asia-Pacific has more than tripled over the past year, with 27% of all Q1 2020 mandates targeting the region compared with 8% in Q1 2019.

Energy strategies will be in demand in 2020. Almost all (99% of) mandates issued in Q1 were for energy exposure.

Meanwhile, appetite for both water and agriculture/farmland funds has increased in comparison with one year ago.

Water strategies represented 12% of all searches in Q1 2019, a proportion that increased by m......................

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