The price of oil might be scaling record highs, but you would be missing the "opportunity of a lifetime" if you backed off investing now, or so says Tim Guinness, manager of the Investec Global Energy Fund.
Look at the way the developed nations gorged themselves on oil between 1950 and 1970. If the developing nations do the same and they are showing every sign of doing so the run up in oil has a long way to go yet. Prepare yourself for $150 a barrel before the end of the decade, Guinness told Reuters.
Guinness, a member of the famous Irish brewing family, has already had a bumper year, with his $2.2bn fund returning 39% against the 9.6% average return in the global energy sector. And with more than 90% of the fund held in gas and oil companies, this is a pretty pure play on the commodity. The fund is heavily weighted towards the big oil caps, with Exxon, Chevron and BP among its largest holdings. "Compared to smaller oil stocks, their performance has been pedestrian, so they look excellent value," Guinness told The Sunday Times.
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Guinness said that a strong run for US independent refineries, such as Tesoro and Valero Energy, also bodes well for the big caps "it signals that the refining business has thrown off the huge overhang of refining capacity that was built up in the last boom", he told Reuters. He is also tapping into Canadian oil sands, with 21% of the fund's holdings in the country, including oil sands giant Opti Canada.
And despite Chinese coal consumption doubling in the last seven years to two billion tonnes a year, Guinness tells Reuters that he still very much likes the China coal story he has held US producer Peabody Energy for a number of years.
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Invested Global Energy Fund top ten holdings
Name of holding, % of assets
Occidental Petroleum, 4.2%
Statoilhydro, 4.2%
Chevron, 4.2%
Conocophillips, 4.1%
Exxon Mobil, 4.1%
BP, 4.1%
ENI, 4.1%
Total, 4.1%
Royal Dutch Shell B, 4.1%
Opti Canada, 3.7%
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