Investment firm Mercer has launched a natural resources fund targeted at institutional investors.
The launch of the fund follows the firm's decision to boost its investment in natural resources.
"Given we have recently increased the level of our investment in natural resources, we felt it should receive its own dedicated sector weighting in our portfolios and we should also make it available to our investors through the Mercer Natural Resources Fund," Mercer chief investment officer Russell Clarke said.
The fund has exposure to three underlying commodities strategies: two in broad commodities and one in agricultural commodities.
"Investing in commodities involves taking exposure to commodity prices," Clarke said.
The fund uses commodity futures to access this exposure rather than buying the physical commodity or buying shares in companies in the commodities sector.
"Commodity futures markets are highly traded and provide a significantly different exposure to shares," Clarke said.
"Investing in the fund also opens the way to investing in some emerging areas in the future, such as timberland and agricultural investments, water and potentially emissions trading."
Timber was the most ripe for investment, however, there were liquidity problems associated with the asset class, he said.
"It takes time for trees to grow and plantations to mature. Therefore, by its very nature, timberland investment requires a long time horizon. However, with supply increasing, this should become less of a hurdle over the next few years," he said.
