Energy fund inflows accelerate; interest in gold funds eases

Energy equity funds available for sale in Singapore recorded total inflows of $174.4 million in September — the highest since February and nearly double August’s inflows, according to Morningstar Direct data. Sentiment towards the energy sector has improved this year with Brent crude oil gaining 13% (as at end-September). And the surprise decision by the Organization of the Petroleum Exporting Countries (Opec) on Sept 28 to agree to an oil production cut has given investors hope that oil prices have bottomed out.

Energy funds with the most inflows in September were the $695 million Schroder ISF Global Energy (+$73.2 million) and $2.7 billion BGF World Energy (+$65.3 million) funds. This year, both funds are up 17.7% and 13%, respectively.

But Brad Sorensen, analyst at Charles Schwab, sounds a cautious note on Opec’s decision in an Oct 13 report. “There still has to be an agreement on which countries are going to cut what, while Libyan and Nigerian oil production has risen recently, according to the International Energy Administration, which could offset any cuts that do occur,” he writes. He also notes that Opec members are “notorious for violating agreements”.

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