Australian resources funds, among last year’s top equity strategies, have recently incurred significant double-digit losses following the Iran conflict. Despite this sharp reversal, astute fund managers are now leveraging the rare market pullback to position for a potential rebound in the mining sector. The S&P/ASX 200 Materials Index entered a bear market in late March, while gold prices plunged 12 per cent—its worst month since the 2008 global financial crisis. This downturn was largely driven by concerns the conflict could trigger simultaneous inflation and an economic slowdown, compounded by soaring diesel costs.
Acorn Capital’s NextGen Resources Fund, with substantial exposure to ASX-listed gold stocks, tumbled over 20 per cent in March. Portfolio manager Rick Squire described the month as one of his most challenging, but emphasised how “forced selling” creates “great buying opportunities.” Acorn capitalised on the broad decline by building a significant position in Midas Minerals. Midas Minerals is a copper and gold explorer, focused on discovering and developing mineral resources. Its shares had pulled back 20 per cent since the US and Israel first struck Iran. Despite the recent dip, Acorn’s fund still boasts nearly 100 per cent growth over the past 12 months.
Terra Capital’s Natural Resources Fund, which impressively doubled investors’ money last year, also saw a 10 per cent decline in March, given its significant gold and copper holdings. Portfolio manager Jeremy Bond reassured clients that commodity prices remain resilient, with the mining sector offering strong balance sheets. Perennial Partners’ two high-flying resources strategies were similarly impacted, with the Strategic Natural Resources Trust falling 7.2 per cent and the Microcap Resources Fund tumbling 13.8 per cent—its worst month in four years. Portfolio manager Sam Berridge anticipates gold prices will resume their upward trajectory, driven by a deteriorating US fiscal deficit and the continued search for alternative stores of value. Perennial is also betting on increased spending on energy infrastructure.
