HEAD-TO-HEAD: Blackrock vs Schroders

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Pictured above: Luke Ng, FE Advisory Asia

For the first time since 2014, oil prices in May surpassed the level of $80 per barrel.

However, the stock prices of energy companies globally have not kept pace. While Brent crude oil picked up 29% over the past three years, the MSCI World Energy 10/40 Index rose only 19%, according to FE.

The gap lays the groundwork for an uptick in energy company stocks. Additionally, global synchronised growth appears to be supportive to oil price growth. But investors should be aware of non-fundamental risks in oil price movements, said Tom Nelson, head of commodities and resources at Investec Asset Management.

Nelson told FSA in a previous interview that the price of oil may be impacted by financial speculation.

“Financial speculators can have a big effect for the market. Global traders broadly hold long positions in oil now. But if they went the other way, like when financial players sold oil in August last year, the price may fall substantially,” he said.

Moreover, the Organisation of the Petroleum Exporting Countries (Opec) can influence the market quite substantially, he added.

Luke Ng, senior vice president at FE Advisory Asia, agreed that the fluctuations of oil prices can be impacted by political events.

“Events like Western countries’ sanctions on oil-exporting countries can move the oil price because the global supply and the logistics of delivery might be affected.” 

Against this backdrop, FSA asked Ng to look at two global energy funds and provide a comparative analysis. They are: The BGF World Energy Fund and the Schroder ISF Global Energy Fund.

Source: FE and Morningstar.

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