Rising oil price prompts search for energy exposure

Energy prices have escalated over the last year and while consumers battle to meet rising costs, investors are seeking the best way to play what looks set to be a strengthening term trend.

Energy prices are notoriously volatile, and the sector is vulnerable to geopolitical forces, as well as all the usual market risks. But one fund, growing rapidly for the second time in the career of its managers, is relying on tried-and trusted-processes to deliver impressive returns.

The Dublin-registered $350m Guinness Energy Fund, led by highly experienced manager Tim Guinness and co-managers Tom Nelson (pictured) and Will Riley, is in its second incarnation. Guinness (previously co-founder of Guinness Flight Asset Management) set up the original fund in 1999, and then from 2003 as part of a venture with Investec Asset Management, grew assets under management to over $2bn, building an outstanding track record in the process.

At the start of 2008, just after the global financial crisis struck, the deal unwound and Investec took the fund back in-house, leaving Guinness and his co-managers to start again. Under the Guinness Asset Management brand a new structure, but with the old managers, was launched in March. By June that year it had attracted $100m, notably from Swiss investors, and after weathering the risk-off mood of the last three years, the fund is now selling in France, Germany and Scandinavia.

Nelson, who joined Guinness with Riley in 2007, says current global macro economics is playing right into their hands. Growing oil demand,led by developing countries,has also proven resilient to recession, falling only 1.4% in 2009 and growing to all-time highs in 2010 and 2011. They believe it is set to outstrip new supply and force oil prices up for the next 10 years.

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