LONDON: Permal Investment Management Services is betting on high returns from the energy sector this year because of robust global economic growth, Middle East unrest and Japan's nuclear disaster.
Omar Kodmani, senior executive officer at Permal said the company had backed energy since the start of the year.
"Our view in January was that the economy globally was moving from recovery that meant rising demand for energy commodities" he told Reuters this week.
Recent economic data from the United States, the world's largest economy, has helped boost sentiment in commodity and equity markets, but Japan's massive earthquake and tsunami together with conflict in the Middle East have subdued some of that enthusiasm.
However, in energy markets worries about supply disruptions because of unrest in the Middle East region pushed oil to near $120 a barrel on February 24, the highest since August 2008.
Meanwhile Japan's nuclear disaster has raised concern that governments around the world could abandon nuclear power in favour of alternative ways of generating power.
"Recently the energy sector has been boosted by the unrest in the Middle East and North Africa and now you have nuclear issues in Japan that will create further advantages for coal and natural gas, alternatives to nuclear," Kodmani said.
A weakening global economy led by the United States or a hard landing in China could persuade Permal to cut allocations to the energy sector, he added.
Permal's assets under management total $22 billion. About $1.2 billion of that is invested with funds devoted to commodities and commodity-linked securities such as equities.
The natural resources sector earned Permal a 16 percent return last year and for the first two months of this year the return number is 2 percent.
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