npavan78
03-07-2008, 07:19 AM
Recently, the government raised fuel prices to reduce India’s ballooning oil subsidy burden. Indian citizens, like their counterparts across Asia, are a harried lot, what with rising prices of commodities, food grains and natural resources, leading to a sharp cut in real income. Governments across the globe are in panic mode, seeking ways to break the spiralling rise in prices, even trying to form cartels to conserve scarce natural resources.
In the past, many western nations with their small populations were reckless consumers of natural resources. But Asia has arrived on the scene. India and China, with little less than half of the world population, experienced economic booms, leading to a sharp rise in per capita income, fuelling the desire for better lifestyles amongst 2.5 billion people. This has led to a spurt in use of natural resources, particularly the demand for energy.
Speculators, led by large and unregulated hedge funds, spotted this trend and fuelled a sharp speculative rise in the prices of oil, commodities and natural resources. This, along with the threat of recession in the US, has led the world to the brink of an economic downturn and soaring prices of natural resources.
For a growing economy like India, the economic value of natural resources like oil, iron, iron ore, coal, cannot be overemphasised. Natural resources are the backbone of any economy. Prices of commodities like base metals, gold, oil, and natural gas have rallied in recent years.
One can profit from this situation by investing in natural resource funds. Natural resources funds are equityoriented mutual funds which invest in companies with business focused on oil, coal, iron ore, agricultural products , forest products, precious metals, renewable and non-renewable energy, and so on. These companies may be involved in discovery, development, production, processing or distribution of natural resources. Companies that contribute new technologies for the efficient use of natural resources, or that provide ancillary services, also form part of the portfolio of these funds.
The foremost advantage of investing in a natural resources fund is diversification across asset classes and geographies. Mutual funds in India cannot invest directly in commodities. So investors can take indirect exposure to industrial commodities by investing in natural resources funds which invest in companies (both domestic and globally) involved in commodities like coal, aluminum, copper, zinc and so on.
In the past, many western nations with their small populations were reckless consumers of natural resources. But Asia has arrived on the scene. India and China, with little less than half of the world population, experienced economic booms, leading to a sharp rise in per capita income, fuelling the desire for better lifestyles amongst 2.5 billion people. This has led to a spurt in use of natural resources, particularly the demand for energy.
Speculators, led by large and unregulated hedge funds, spotted this trend and fuelled a sharp speculative rise in the prices of oil, commodities and natural resources. This, along with the threat of recession in the US, has led the world to the brink of an economic downturn and soaring prices of natural resources.
For a growing economy like India, the economic value of natural resources like oil, iron, iron ore, coal, cannot be overemphasised. Natural resources are the backbone of any economy. Prices of commodities like base metals, gold, oil, and natural gas have rallied in recent years.
One can profit from this situation by investing in natural resource funds. Natural resources funds are equityoriented mutual funds which invest in companies with business focused on oil, coal, iron ore, agricultural products , forest products, precious metals, renewable and non-renewable energy, and so on. These companies may be involved in discovery, development, production, processing or distribution of natural resources. Companies that contribute new technologies for the efficient use of natural resources, or that provide ancillary services, also form part of the portfolio of these funds.
The foremost advantage of investing in a natural resources fund is diversification across asset classes and geographies. Mutual funds in India cannot invest directly in commodities. So investors can take indirect exposure to industrial commodities by investing in natural resources funds which invest in companies (both domestic and globally) involved in commodities like coal, aluminum, copper, zinc and so on.