The Electrum Fund rose +9.0% during the month (I2 EUR), compared with the EMIX Global Mining Index which rose +10.2% (in Euro terms).
In February, the outlook for global markets clouded, with volatility soaring on the news of Russia’s invasion of Ukraine. Russian exposure (held via equities listed on established western exchanges only) had already been reduced, for both risk management and ESG reasons, and has since been further divested. Today the Electrum Fund holds just a single position in a Russian company (held via Hong Kong) accounting for just 0.8% of NAV.
Amid the ongoing deeply troubling situation in Ukraine we see a range of implications for metals and mining. The crisis and subsequent incoming sanctions against Russia will likely exacerbate existing supply issues, particularly for nickel, PGM and vanadium markets, of which a significant portion of production is Russian, and where markets are very tight already. Energy prices, which were already rising prior to the Ukraine crisis, are surging. Commodities particularly impacted by higher costs include aluminium and fertilizers, and we expect to see higher prices ahead for these materials.
Baker Steel’s funds are actively positioned to offer investors important diversification in troubling times, while managing portfolio risks in this volatile environment. Through a focus on high-quality, undervalued, producers which can manage higher energy costs and protect margins, the BAKERSTEEL Electrum Fund is positioned to benefit from the continuation of the green revolution and a global search for alternative energy sources.
You can read more about our views on the opportunities in speciality metals equities and the new green commodity supercycle here.
You can also read our most recent Investment Manager’s Commentary here.