Raw Material Rally Boosts Related Fund Returns 'High High'

Natural Resource Fund Up 18.81% Since Early Year... Highest Return Among Thematic Funds

[Asia Economy Reporter Song Hwajeong] This year, as raw material prices have shown strength, funds related to raw materials and natural resources have been posting soaring returns.

According to financial information company FnGuide on the 5th, natural resource funds rose 18.81% since the beginning of the year, recording the highest returns among 46 theme funds classified by FnGuide. Commodity funds also ranked high with an 8.34% return.

By fund, KBSTAR US S&P Oil Production Companies Securities Listed Index Investment Trust (Stock-Derivative Type) (Synthetic H) recorded a 44.24% return since the beginning of the year, and Samsung WTI Oil Special Asset Investment Trust 1 [WTI Oil-Derivative Type] (A) rose 24.60%.

The strong raw material prices this year have led to high returns for related funds. International oil prices surpassed $60 last month, recovering to pre-COVID-19 levels. In particular, as OPEC+ (the Organization of the Petroleum Exporting Countries (OPEC) member countries and non-OPEC consultative group) decided not to increase production next month, on the 4th (local time) at the New York Mercantile Exchange, April delivery West Texas Intermediate (WTI) crude oil closed at $63.83 per barrel, up 4.16% from the previous trading day. This is the highest price in 1 year and 10 months since April 30, 2019 ($63.91 per barrel).

According to Daishin Securities, the CRB index, calculated using prices of 19 commodity futures including grains, crude oil, metals, and precious metals, rose 16.6% last month compared to the beginning of the year, recovering to the level of October 2018. Within raw materials, energy, industrial metals, and agricultural products showed the highest price increases in that order. The London Metal Exchange (LME) non-ferrous metals index also rose to the level of August 2011. Kim Sohyun, a researcher at Daishin Securities, analyzed, "The recent price increase of cyclical raw materials is due to expectations of future economic recovery and concerns about supply shortages. In particular, for international oil prices, supply shortage issues are highlighted due to possible delays in oil production facility recovery caused by cold waves in the central US region and Saudi Arabia's voluntary production cuts."

Recently, with simultaneous rises in non-ferrous metal prices, oil prices, and grain prices, the possibility of entering a raw material supercycle is also being raised, and the strength of related funds is expected to continue. Park Sanghyun, a researcher at Hi Investment & Securities, said, "Although it is somewhat early to mention a supercycle like in the past, considering the strong economic rebound cycle based on the vaccine economy, there is a high possibility of a short and strong raw material cycle appearing."