The main aim of natural resource funds is to capture the boom that is prevailing in natural resources sector due to rapidly growing demand, leading in higher prices of such products. Many companies in the above mentioned sector is likely to show strong growth. This will then reflect in higher equity prices of their stocks. Presently, investors can certainly take a small exposure to natural resources funds for medium term gains.
We have certain historical evidences to analyze natural funds. For example: Reliance Mutual fund was launched in February, this year. It was called the Reliance Natural Resources fund. There was an over whelming response from investors. The scheme attracted about Rs. 6000 crore in subscriptions. Also, there was the DSP ML Natural Resources and new energy fund which was launched in April and had managed to amass around Rs.275 crore from the investors. Thus, investors also benefit in terms of Global diversification. HSBC Agriculture and Natural Resources, ING Global Resources and Tata Natural Resources funds set to hit the market in the near future.
In India, prices of commodities like Gold, base metals, oil and natural gas are on a rising trend. This environment can be benefited to those who invest in natural resource funds. The investors are the ones who will see profits due to the increase in the above mentioned commodities. Natural resources funds are in the form of equity oriented mutual funds. They are the ones who invest in companies which have business in oil, coal, iron, precious metals etc. These companies may deal in discovery, development, production, processing or distribution of natural resources. Also, companies that contribute new technologies for the efficient use of natural resources will also form part of the portfolio of these natural resource funds.