Terra Capital – Resources Reign

As featured in Money Management Magazine:

A Sydney team of two fund managers have produced over 57 per cent year-to-date, ranking them as the second best performing Australian fund manager, after they profited from uranium and lithium.

Terra Capital Natural Resources jumped 57.13 per cent year-to-date (YTD), which meant it outperformed its peers and all other managed funds in Australia except Select Baker’s steel gold fund, which produced 88.15 per cent, according to Money Management’s Investment Centre (MMIC),

Terra Capital investment manager, Jeremy Bond, said it was the third time in six years since the fund’s inception that they generated a return over 50 per cent.

Over the last three years, it returned around 30 per cent per annum, while the small resources index languished at 1.8 per cent.

One of the key drivers was uranium, their largest position in their concentrated portfolio of 25 stocks, which made up 10 per cent of their portfolio.

They held a Canadian listed uranium stock that went up five times since they purchased it, while the commodity price fell.

As uranium was trading around decade lows, and was tipped to increase over the next year 18 months, that too would further bolster their performance, Bond said.

“We picked a few thematic [sectors] about 18 months ago which we focused on, such as the gold sector, the electric car sector, that being lithium graphite, cobalt. And on the food sector, for us that encompassed potash and phosphate… along with our uranium position that had performed very well,” he said.

They were unlike any other resource fund and managed fund, as they distributed a large amount of capital back to investors, Bond said.

This year, initial investors would get cash a distribution of up to 75 cents for every dollar invested, he said.

Their second biggest holding was a lithium stock, Galaxy Resources.

“We purchased [Galaxy] at around four cents. It’s now trading at around $0.50 today and General Mining at five cents and it’s now around $0.80. So both those stocks performed very very well,” he said.

Terra Capital was confident it could continue to outperform not only as the commodity market was rising, but also because they held other cheap resource holdings such as sulphate of potash, a fruit and vegetable fertiliser predicted to be the next bull market.