Which funds are most exposed to Glencore fallout?

Natixis Harris Associates Concentrated US Equity fund has the largest exposure to Glencore, as analysts say the mining company could face “severe problems”.

The Natixis Harris Associates Concentrated US Equity fund has a 6.2 per cent allocation to the mining company, the most for any fund in the IA universe, according to FE data. It is followed by the £511m BlackRock GF World Mining fund, which has a 5.64 per cent allocation to Glencore, and the Baring Global Mining fund at 4.3 per cent.

The price of Glencore’s stock plummeted 30 per cent on Monday, after Investec analysts warned that the company could be hit by the continuing fall in commodity prices. The stock has fallen by 75 per cent this year – the largest drop for a FTSE 100 stock.

At the heart of Glencore’s issue is its £20bn debt, which analysts say needs to be restructured, the cost of which is increasing while commodity prices are falling. Also up for debate is the potential price the company can reach for selling off its agriculture business.

“Fears that China’s economic slowdown will continue to weigh heavily on metal prices going forward and that the commodities super-cycle is very much dead in the water will leave those invested in the sector feeling the pain for quite some time,” says Tahmina Mannan, market and industry content editor at FE Trustnet. 

“Investors in FTSE 100 trackers are likely to be affected the most from Glencore’s troubles – as the mining company continues to impact the UK benchmark.”

BlackRock GF World Mining cut back its Glencore position last month, from 7.97 per cent to 5.64 per cent.

In the latest manager commentary, BlackRock GF World Mining managers Evy Hambro and Olivia Markham say some stocks are being hit harder by market sentiment than by actual falls in commodity prices.

“The moves seen across mining shares in August seemed to be driven more by financial flows and the increasingly negative sentiment around China than by the price moves in the underlying commodities.”

Meanwhile, Baring Global Mining fund manager Clive Burstow also cut back his Glencore position in August as he had “deeper-rooted concerns post a poor set of mid-year results”.

FE Glencore

Correction: This story has been updated to reflect the latest data from BlackRock. It previously stated the BlackRock GF World Mining fund had a 7.97 per cent position, but this was reduced in August to 5.64 per cent.