JPMorgan-Led Fund Shines as Glencore Survives ‘Darkest Days’ – by Luzi-Ann Javier and Susanne Barton (Bloomberg News – December 20, 2016)

When shares of mining companies including Freeport-McMoRan Inc. to Glencore Plc were collapsing last year, a small fund run by JPMorgan Asset Management chose to hold on. Now, it’s reaping the rewards of a metals rebound that’s turning bears into bulls.

Old Mutual-JPM Natural Resources Fund has delivered a return of 79 percent this year, beating all but two of the 150 funds it competes with in North America and Western Europe that are tracked by Bloomberg. Glencore, one of its biggest holdings, has tripled after plunging 70 percent in 2015. Freeport lost about as much last year, only to double in 2016.

“Even during the darkest days at the back end of last year and two weeks of January, we held in there with mining companies that people thought were going to go bust,” said James Sutton, who helps oversee $2.5 billion in natural resources assets run by JPMorgan, including Old Mutual.

Investors are paying more attention to metal producers, which have cut debt and costs to better benefit from a rebound in prices and demand. Citigroup Inc. and Bank of America Merrill Lynch are optimistic the industry will extend its recovery. Morgan Stanley listed zinc, nickel and aluminum as its top picks for next year, boosting its forecasts for each.

Before the recovery, the industry was mired in a three-year slump as output surged and demand slowed from top consumer China. A Bloomberg Intelligence gauge of 18 global base-metal producers including Freeport, Glencore and BHP Billiton Ltd. slumped 66 percent from the end of 2012 through 2015.

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