Artemis energy duo: Listing location now vital to returns

John Dodd and Richard Hulf, managers of the £84m Artemis Global Energy fund, are reducing exposure to eurozone-domiciled assets as they refine their approach to stock selection.

Hulf said the fund's strategy of lining up a steady flow of positive news and catalysts has been affected by the poor sentiment seen across European markets over the past six months.

"If you take any group of companies with a moderate to positive newsflow, they would be steadily notching up in a steady market. But in markets where sentiment is very negative, if they are not saying ‘we have just tripled reserves' then they are just drifting down," he said.

"We thought we could get by just by putting macro issues in the background with the energy fund and just look at commodity pricing, but listing location has become quite key in the past six months."

"We are trying to reduce weightings in the eurozone," Hulf said. The fund retains positions in the UK and Norway, but Hulf said listings in all European markets could be affected.

"You could get exposure to Indonesian gas production and increased demand through [UK listed] Salamander, but at the moment it may be better to do it through an Indonesian company."

Accordingly, Hulf and Dodd have been increasing weightings in domiciles including North America and Brazil. They favour companies such as Brazil's OBX, US oil and gas exploration play Occidental and state-owned Chinese oil company CNOOC.

Turning to the oil price, Hulf said there are enough supply-side issues to ensure the maintaining of the status quo, and forecast Brent crude will remain at between $100 and $110 a barrel over the coming year.

"The IEA intervening last year when OPEC failed to increase production shows there are remedies in place to take the heat. Similarly, there will be a pull-back on production where oil prices look like they are going to fall."