In a recent episode of “Behind the Ticker,” Al Chu, portfolio manager at Man GLG, discussed his role managing the American Beacon GLG Natural Resources ETF (ticker: MGNR). Chu, who has over two decades of experience in natural resources investing, described his journey from managing natural resources strategies at BNY Mellon and various hedge funds to leading this strategy at Man GLG. With the backing of Man Group, a UK-listed alpha-focused alternative manager, Chu’s expertise is now accessible to a broader audience through the active ETF structure.
About Al Chu and American Beacon GLG Natural Resources ETF
Chu explained that MGNR takes a long-only, equity-based approach to natural resources investing, distinct from many other commodity ETFs that rely on futures or fund-of-funds models. The ETF focuses on equities within the natural resources space, such as oil producers, oilfield services, and mining companies, aiming to capitalize on alpha opportunities driven by commodity cycles. The active strategy allows the fund to adjust exposures dynamically, targeting subsectors and companies that offer the highest return potential based on commodity trends, regional dynamics, and bottom-up company analysis.
Investment Strategy and Approach
A unique aspect of MGNR is its structured investment process, which begins with identifying favorable commodity cycles, then drilling down into specific subsectors, and finally selecting companies with strong fundamentals, management, and assets. Chu highlighted the importance of maintaining diversification within the fund, capping individual positions at 5% and limiting sector and subsector concentrations to manage risk effectively. The fund typically holds 40 to 50 names, representing a concentrated yet diversified exposure to the natural resources space.
Chu also addressed the fund’s appeal to advisors and investors looking for exposure to real assets with low correlation to traditional equities and bonds. MGNR is positioned as an alternative to passive commodity exposure, providing not only a hedge against inflation but also an opportunity to benefit from the operational and financial leverage of resource companies.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Al Chu covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
Very developed and very deep liquid markets. 80 to 90% of the listings are OECD, U.S., Canada, Australia, Western Europe. There is very little EM and no frontier market exposure. This is one of those I want to keep the risk as concentrated into the commodities and natural resources world for us is taking something I'm intended to like a sovereign risk for my investors. So as you mentioned earlier, the fund is active.
So let's talk about the ETF, which is MGNR. It's the American beacon, natural resources ETF. You know, at a very high level, can you explain the investment strategy and what this fund is really trying to accomplish? Sure, so the, we, this is a, a long, only equity product. There's no derivatives, no leverage. And what we invest in is natural resources, equities. Now, this is different from a lot of the other products that are in the market and that one, it's an active ETF, right?
Market Context and Positioning
The, I think the core system to tend the main tenant of this fund really is alpha generation, right? And I think being an alternative, you know, asset manager, I think that that point is really prevalent across. I think the investors tend to think of commodities as they owe it's a broader beta play correlation of one. There's no, all goes up and it all goes down and that really is just not the case, right? If we look at the benchmark, the S&T global natural resources index or any benchmark, a commodities benchmark, he used to become index or the GSEI.
It's rare to find a very small cab, ill-liquid name in the top holdings, just because again, is that, you know, investing is all about managing the times you're wrong, as much as it is about managing what you're right. So if we're wrong, we have to be able to get out. That's liquidity, that's risk management. Two is the conviction level as well, right? Oftentimes, getting conviction to a name is a process, right?
It was in the art products. I think these guys are having way ahead of the curve and way ahead of the ball in terms of getting in front of the active ETF movement. So they've been fantastic partners. So man group, man geology, man group. We do all the investing, running the actual portfolio and then American beach and helps us with the distribution.
Notable Insights
"And, you know, at the end of the day, I still think that, you know, my opinion and my judgment would be the most important factor."
"Iron ore, what would be the biggest metals by volume and dollar traded was down over 50% at one point, right?"
Key Takeaways
- The ETF focuses on equities within the natural resources space, such as oil producers, oilfield services, and mining companies, aiming to capitalize on alpha opportunities driven by commodity cycles.
- The active strategy allows the fund to adjust exposures dynamically, targeting subsectors and companies that offer the highest return potential based on commodity trends, regional dynamics, and bottom-up company analysis.
- A unique aspect of MGNR is its structured investment process, which begins with identifying favorable commodity cycles, then drilling down into specific subsectors, and finally selecting companies with strong fundamentals, management, and assets.
- The fund typically holds 40 to 50 names, representing a concentrated yet diversified exposure to the natural resources space.
- MGNR is positioned as an alternative to passive commodity exposure, providing not only a hedge against inflation but also an opportunity to benefit from the operational and financial leverage of resource companies.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Al Chu highlights important considerations around income investing. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
The themes of income investing and energy discussed in this episode are particularly relevant in the current market environment, where advisors are increasingly looking for differentiated solutions that go beyond traditional benchmarks.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Al Chu, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.