Why We Launched GERAF: Investment Rationale, Broad commodity exposures, Global focus, Quality orientation and Liquidity

In an era of elevated debt, persistent geopolitical tensions, and volatile financial markets, GERAF was established to deliver investors exposure to a breadth of commodities related businesses across Precious Metals, Energy, and Industrial Metals. By focusing on listed companies, with global operations, across the mid-cap part of the market, underpinned by quality and disciplined valuation frameworks, the strategy aims to generate reasonable long-term returns.

The Investment Rationale for Setting Up GERAF

The decision to establish GERAF stems from a clear conviction: in today’s macro environment, investors require a dedicated investment vehicle that provides broad commodity exposure, global diversification, reasonable long-term returns, and daily liquidity.

Traditional portfolios heavy in equities and bonds have become increasingly vulnerable to rising government debt levels, inflation surprises, and geopolitical fragmentation. Real assets — commodities and the companies that produce them — have historically served as an effective hedge and source of durable returns during such periods. GERAF’s investment rationale therefore concentrates on three complementary sleeves:

• Precious Metals (PM) — anchored by gold

• Energy (E) — with a primary focus on natural gas, plus selective oil and uranium exposure

• Industrial Metals (IM) — including copper and selective critical minerals

All investments are made in listed companies to ensure liquidity and regular reporting, while rigorous bottom-up analysis and a strict margin-of-safety discipline aim to protect capital and enhance upside.

Listed Developed Markets

We invest exclusively in listed companies on developed market exchanges. This delivers daily liquidity, transparent pricing, and strong corporate governance standards. Being listed in developed markets also provides access to quality management teams, established capital markets, and robust legal protections for shareholders.

Global Focus

In mid-2024, when seeking to invest a meaningful portion of liquidity into real assets, it became clear that suitable vehicles were limited in Australia. Despite the ASX being dominated by natural resources companies, the ASX opportunities appeared unbalanced and unlikely to deliver strong long-term outperformance. The ASX is heavily skewed toward iron ore (tied to Chinese steel demand), large mature businesses with limited growth, and pro-cyclical exposures. Indices simply replicate these biases due to market-cap weighting.

Furthermore Australia is generally an expensive market, and itself it is facing growing policy and cost challenges, including permitting uncertainty, high labour and energy costs, and continued concerning government actions detering private capital.

GERAF therefore maintains a genuinely global mandate. Investing globally allows us to:

• Broaden the suite of choices and build a portfolio with genuine quality across people and assets;

• Capture value arbitrages across different markets;

• Focus on jurisdictions that actively welcome and support private investment;

• Deliver meaningful country diversification benefits.

This global flexibility is a core advantage of the strategy and enables us to direct capital to the best risk/reward opportunities worldwide.

Mid-Cap Focus by Design

GERAF deliberately targets mid-capitalisation (mid-cap) companies (generally A$200 million to A$15 billion market capitalisation). Large-cap resource companies are typically well-researched, heavily indexed, mature businesses with limited meaningful future growth. Allocating heavily to them (or to indices weighted by market capitalisation) would simply mirror the concentrated, pro-cyclical nature of the ASX.

By focusing on quality mid-cap companies, we gain access to growing businesses that are often under-followed by analysts and trade at meaningful discounts to intrinsic value. This segment offers the optimal combination of growth upside and genuine mispricing opportunities — while still maintaining sufficient liquidity for investors.

GERAF’s Disciplined Investment Approach

GERAF invests primarily in quality listed companies in the precious metals, energy and braoder resources sectors— typically focussing on those with experienced, value-oriented management teams, quality assets, and strong balance sheets. Positions are acquired at a sizeable margin of safety utilising conservative long-term price assumptions. This valuation discipline is a key source of the alpha we seek to deliver.

If the underling price continues its structural uptrend, the portfolio benefits directly. Should a correction occur, the embedded margin of safety and selective downside protection measures limit the impact on long-term portfolio value while ongoing operational improvements and reserve growth continue to compound.

This same rigorous, margin-of-safety framework is applied across the sleeves of the strategy, ensuring the overall GERAF portfolio remains resilient, globally diversified, and positioned for reasonable long-term real returns.

Conclusion

GERAF was purpose-built for investors seeking broad exposure to real assets — without sacrificing liquidity or prudent risk management. By focusing on listed companies in precious metals, energy, and industrial metals, we aim to capture both the defensive and growth characteristics these sectors offer while delivering a transparent, liquid, and high-conviction strategy.