THE oil and gas sector is still able to offer promising upside potential to investors over the near to medium term, backed by growing energy demand as well as unlocking of new resources, said a fund manager.
"The oil and gas story is still upholding," said Henrietta Lance, senior portfolio manager of Amundi Islamic Global Resources.
Speaking at a briefing hosted by AmIslamic Funds Management, Lance foresees that Asian energy demand will grow from 18 million barrels a day in 2010 to 24 million in 2020 and 30 million in 2030.
"In Europe, new technology is breathing fresh life into mature Norwegian and UK North Sea reserves and unlocking new resources and extending mature reserve life, while some American manufacturers have taken the decision to 're-shore'.
"Energy is not only 'defensive' in today's markets, there is also upside potential for investors though these dynamics are not yet reflected by equity markets," she added.
In terms of outlook, global resource companies with good visibility of earnings and attractive risk-reward ratios are among the key strengths.
Lance is over-weighting on well diversified large caps with healthy cash flow profiles in the energy sector.
Meanwhile, AmInvest retail funds director Ng Chze How, who was also at the briefing, commented on AmIslamic Fund Management's AmCommodities Equity fund.
Ng said AmCommodities Equity is a feeder fund that invests in Amundi Islamic Global Resources.
"With the recent surge in commodities trend, we have witnessed the fund recording a 8.15 per cent return in just three months.
"This is in tandem with global commodity prices rising 10 per cent in the same duration of July to September 2012.
"The fund has also recorded a one-year performance of 9.63 per cent, outperforming its benchmark of 8.12 per cent," said Ng.