* No sign of bull run losing steam
* Fund outperforms rivals by 30 percentage points
* Sector still subject to volatility
By Claire Milhench
LONDON, March 16 Ian Henderson has seen
commodity markets swing from boom to bust and back again since
his first brush with the sector in Canada in the 1970s, but the
veteran manager of JP Morgan's Natural Resources Fund says he is
now looking at a halcyon period for producers.
With over 30 years' experience in the business, 61-year-old
Henderson, a scion of the Henderson wealth management dynasty,
is in a unique position to call the market.
And as levels of consumption in emerging markets are still a
fraction of those in the developed world, Henderson believes
there is no sign the commodities bull run will end soon.
The resurgence of interest in commodities has helped the
fund he manages LP60098284 for JP Morgan (JPM.N) attract 1.74
billion pounds ($2.62 billion) and it is outperforming rivals.
It's a far cry from the dark days of the 1980s and 1990s,
when technology stocks hoovered up all the cash, and when
scandals, such as the copper market manipulation by Yasuo "Mr
Copper" Hamanaka at Sumitomo, and the Bre-X fraud based on a
fictitious gold mine in Indonesia, shook investor confidence.
"As a result there was very little interest in natural
resources," Henderson recalls. "Commodity prices were weak and
funds were closing left, right and centre because they just
The sector turned the corner in 1991 when gold guru Julian
Baring touted his James Capel Gold & General Fund around the
market, eventually taking it to Mercury Asset Management.
At this time Henderson was managing a global financials fund
at Flemings, but having always been interested in natural
resources he saw his chance and angled for a launch. "We had to
twist a few arms to get the money in," he said.
By 2002, everyone was "pretty fed up" with commodities but
he fought a rearguard action to save a fund that was deemed too
small to be commercial. Then China hit the markets and the game
changed. Commodities were back on top.
The JP Morgan fund is up 87.2 percent in the 12 months to
end-Feb, beating peers in the Lipper Global Natural Resources
equity sector by 30 percentage points.
Henderson has spent most of his working life in the City,
but originally considered a legal career following a Philosophy
and Politics degree at Edinburgh University.
It was a desire to get his head around balance sheets that
led him to an accountancy job in oil boomtown Calgary.
"It was a great place to be because of the first oil shock
-- it was growing exponentially, and if you like the outdoors
life there was the skiing," said Henderson, who enjoys horse
riding and shooting back home.
On returning to the UK he took a job at Morgan Grenfell, to
whom he's clearly grateful for looking past the bell-bottom
trousers he wore to the interview. Well, it was the 1970s.
It was here Henderson had another brush with commodities,
taking responsibility for managing the resource-driven former
"Because oil prices were going through the roof, some stocks
went up dramatically." He cites the example of the investment
bubble around the 'Rundle twins', Southern Pacific Petroleum and
Central Pacific Minerals, which were trying to get oil from
shale in Australia -- a commercially unviable operation. "But
those stocks went up a couple of hundred times."
Commodities investment is still vulnerable to volatile price
movements, which Henderson acknowledges: "No one knows how the
herd is going to behave -- it is very much driven by momentum
trades rather than long-term fundamental analysis."
But he believes institutional investors trying to hedge
their inflation risk won't be put off by short-term trends. "I
don't think flows will be negative for commodity funds but price
movements will be more muted this year so flows may slow."
Ironically, one of his biggest regrets is not investment
related but the fact he once turned down an offer to join an
offshoot of the family firm in Hong Kong.
"It was probably the biggest career mistake I could have
made because people made an absolute tonne of money out there."