Bad Month for the Bulls – Better Times Beckon
Ascenta Asset Management releases their market commentary for the Special Situations Resource Fund Factsheet of September 2011.
Ebene, Mauritius, October 21, 2011 --(PR.com)-- Ascenta Asset Management, a licensed portfolio manager and investment advisor to the Ascenta Special Situations Resource Fund, recently released their market commentary for their Special Situations Resource Fund for the month of September 2011. The market commentary is written by Jason Cubbit, Managing Director Fund Services.
“The Ascenta Fund suffered its most severe loss since inception, down 21.51% for the month of September. While losses were experienced across all sectors of the market, the junior commodity markets were hit especially hard. Risk aversion effectively strangled this market and while some volatility is normal, particularly in the junior sector, this last correction represents one of the most severe market corrections in the last 25 years leaving the S&P TSX Venture Index down over 40% since March. The reasons are familiar to us all by now, European Sovereign debt, an anemic US recovery and fears of a Chinese slow down.
"Typical corrections on the S&P TSX Venture Index over the last 10 years, excluding the 2008 crash, have ranged from 17 - 31% over a six to 19 week period. The S&P TSX Venture is currently back to the equivalent of October 2003 levels. As a reference, in October 2003, bullion was trading at USD420/oz.
"Notwithstanding a significant reduction in market capitalization of these companies we remain comfortable with their fundamentals. Despite some retrenchment metals prices remain significantly above historic averages allowing for mineral projects to develop into high margin operations. Junior exploration companies have enjoyed two years of buoyant markets and most remain well funded. And middle market and major producing mining companies have significant cash balances, likely leading to an active M&A season. All of this should be supportive of near term strength in the sector.
"While volatility in the past month has produced significant losses in the Ascenta portfolio we would expect that with a reduction in risk aversion, the market will quickly return this basket of equities to a more normalized price. While bargains are plentiful, we are continuing to build cash as we look for signs of a bottom. Normal cycles for the sector are less relevant in today's highly charged investing environment but typical seasonal strength is from the end of November to the end of May. With some positive movement in Europe we would expect a short period of consolidation in October followed by a strong move upward in November as real demand returns to the commodities marketplace.”
Ascenta Asset Management has also announced the launch of a Canadian Dollar link to the fund available today. The first dealing date for this fund was on the 16th of September, 2011.
About Ascenta Asset Management Ltd.
Ascenta Asset Management Ltd. Is a licensed portfolio manager and the designated advisor to the Ascenta Special Situations Resource Fund. As specialists in the natural resource sector, the founders of Ascenta bring a wealth of experience in all experience in all aspects of the industry, from the founding of natural resource companies, to proprietary trading and equity financing of natural resource issuers, to originating investment themes and products for money managers, It's this diverse experience, gained over decades and across five continents that gives Ascenta a unique perspective to investing in the sector.
For more information of the Ascenta Special Situations Resource Fund, visit the website: http://www.ascentainternational.com
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“The Ascenta Fund suffered its most severe loss since inception, down 21.51% for the month of September. While losses were experienced across all sectors of the market, the junior commodity markets were hit especially hard. Risk aversion effectively strangled this market and while some volatility is normal, particularly in the junior sector, this last correction represents one of the most severe market corrections in the last 25 years leaving the S&P TSX Venture Index down over 40% since March. The reasons are familiar to us all by now, European Sovereign debt, an anemic US recovery and fears of a Chinese slow down.
"Typical corrections on the S&P TSX Venture Index over the last 10 years, excluding the 2008 crash, have ranged from 17 - 31% over a six to 19 week period. The S&P TSX Venture is currently back to the equivalent of October 2003 levels. As a reference, in October 2003, bullion was trading at USD420/oz.
"Notwithstanding a significant reduction in market capitalization of these companies we remain comfortable with their fundamentals. Despite some retrenchment metals prices remain significantly above historic averages allowing for mineral projects to develop into high margin operations. Junior exploration companies have enjoyed two years of buoyant markets and most remain well funded. And middle market and major producing mining companies have significant cash balances, likely leading to an active M&A season. All of this should be supportive of near term strength in the sector.
"While volatility in the past month has produced significant losses in the Ascenta portfolio we would expect that with a reduction in risk aversion, the market will quickly return this basket of equities to a more normalized price. While bargains are plentiful, we are continuing to build cash as we look for signs of a bottom. Normal cycles for the sector are less relevant in today's highly charged investing environment but typical seasonal strength is from the end of November to the end of May. With some positive movement in Europe we would expect a short period of consolidation in October followed by a strong move upward in November as real demand returns to the commodities marketplace.”
Ascenta Asset Management has also announced the launch of a Canadian Dollar link to the fund available today. The first dealing date for this fund was on the 16th of September, 2011.
About Ascenta Asset Management Ltd.
Ascenta Asset Management Ltd. Is a licensed portfolio manager and the designated advisor to the Ascenta Special Situations Resource Fund. As specialists in the natural resource sector, the founders of Ascenta bring a wealth of experience in all experience in all aspects of the industry, from the founding of natural resource companies, to proprietary trading and equity financing of natural resource issuers, to originating investment themes and products for money managers, It's this diverse experience, gained over decades and across five continents that gives Ascenta a unique perspective to investing in the sector.
For more information of the Ascenta Special Situations Resource Fund, visit the website: http://www.ascentainternational.com
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Contact
Ascenta International
John Morgan
+44 1481 732888
http://www.ascentainternational.com
John Morgan
+44 1481 732888
http://www.ascentainternational.com
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