The Earth Sustainable Resources Fund combines the seemingly contradictory areas of natural resources and sustainability. Photo: Skyhobo Source: iStock

The Evolution of a Natural Resources Fund

Author: Dr. Joachim Berlenbach und Dr. Pereshia Berlenbach, Earth Resource Investments

Natural resources have accompanied the development of mankind since the Stone Age. Nowadays, the extraction of natural resources often comes under fire, largely because of sustainability issues. Earth Resource Investments (ERI), the renowned and successful natural resources boutique, has adapted its strategy for this very reason, launching the natural resource-focused “Earth Sustainable Resources Fund”, which combines the seemingly contradictory areas of natural resources and sustainability.

Dr. Joachim Berlenbach, Founder and Managing Director, Earth Resource Investments Photo: Rolf Schmidli (Atelier Schlossberg)
Dr. Pereshia Berlenbach, COO, Earth Resource Investments Photo: Rolf Schmidli (Atelier Schlossberg)

In an interview, Dr. Joachim Berlenbach, founder and Managing Director of ERI, and his wife Dr. Pereshia Berlenbach, the COO and brains behind the boutique’s scientific model, discuss their natural resources strategy as well as the fund’s new sustainability concept. They also address the central role played by natural resources such as copper, rare earths and lithium in the ecological transformation of our economy and society. A far more differentiated picture needs to be drawn in this respect.

universal spotlight: Dr. Berlenbach, you are not only a fund advisor but you also have a PhD in geology. How can one invest in natural resources yet still keep an eye on sustainability?

Dr. Joachim Berlenbach: We are witnessing exponential growth in demand for the metals required to set the industry up for the 21st century. We now need natural resources such as silver, cobalt and lithium, which used to play a lesser role in the industry, and we need them in unprecedented amounts. But where do we get the metals to support the energy transition from? We are confronted with a paradox. On the one hand, the extraction of natural resources creates C02 emissions, on the other hand, we need natural resources to produce batteries for electric cars and to manufacture solar panels. Without these raw materials, creating a sustainable future would prove far more challenging.

Are many investors just taking the easy way out by demonising the natural resources sector per se?

Dr. Joachim Berlenbach: Absolutely. Many investors reject mining stocks and take the easy way out by avoiding natural resources and the materials we need to ensure a sustainable future. Natural resources such as cobalt, lithium and nickel are indispensable if we are to achieve the goals of the Paris climate accord. For example, the world will have to extract more copper in the next quarter of a century than in the entire history of mankind to date.

How do you plan to help shape this change of thought?

Dr. Pereshia Berlenbach: A detailed analysis of the companies is crucial. We evaluate companies for the Earth Sustainable Resources Fund using proprietary methodology, and consider more than 90 different criteria. These include, for example, the steps the company is taking towards a circular economy, their carbon footprint, transparent reporting and the measures they are taking to work with artisanal miners and reduce poverty. If we identify any innovative solutions for their businesses, we engage with management. In this way we aim to actively create value for the investors and for the industry as a whole. We believe that sustainability should be factored into the entire supply chain - and that begins with mining.

In addition to your recent sustainable fund, the ERI team have for some time now been successfully advising two further natural resource funds: the Earth Exploration Fund UI and the Earth Gold Fund UI. These have been benefitting from rising gold prices, am I right?

Dr. Joachim Berlenbach: Correct. There has never been a more bullish environment for gold than the one we are seeing now. In our opinion, if you take the current levels of interest rates and global debt as well as the threat of inflation, gold is, depending on an individual investor’s appetite for risk, an absolute must for every portfolio, whether in physical form or in gold stocks. Money is currently being printed all over the world. Gold, however, cannot be printed. This is why the rise in the price of gold is not at all surprising.

The evolution of natural resources

The independent natural resources specialist ERI has attracted attention with its strong performance on the back of its dual expertise. The boutique’s cooperation with Universal-Investment began in 2006 with the launch of the Earth Exploration Fund UI (ISIN DE000A1C2XE1) and was expanded in 2008 with the Earth Gold Fund UI (ISIN DE000A1CUGZ4) . The range of funds was further expanded in November 2019 with the launch of the Earth Sustainable Resources Fund (ISIN DE000A2PMW37) .

Dr. Joachim Berlenbach sums up the cooperation as follows: “In Universal-Investment we found a partner who was willing to act as an asset manager and to implement our fund ideas even with a fairly limited initial volume so that we could focus on our research and investment concepts. The natural resources investment sector is extremely cyclical and prone to strong fluctuations – Universal-Investment has proved a trusted partner by our side in both positive and less positive market phases.” Evidence of the ERI expertise can be seen in the Earth Gold Fund UI’s position at the top of its category at the BVI (German Investment Funds Association) across various time periods.1 The fund is split equally between private and institutional investors. Share classes are available for both segments.

1 Source: BVI-Statistics Mutual Funds, Peer group comparison as of 31.12.2020; 3- and 5-year periods; Equity funds category natural resources/energy stocks (AROH): 1st and 2nd position (EUR I and EUR R share classes).

(published February 2021) 

Author: Dr. Joachim Berlenbach und Dr. Pereshia Berlenbach, Earth Resource Investments
Date of issue: 7/7/2021