Energy Space Still Has Value

The rising cost of commodities is just one of the challenges posed to investors in the energy space, but there is still value in the sector, a Fidelity portfolio manager told attendees of Morningstar's mutual fund industry conference in Chicago.

John Dowd, portfolio manager of the (FSENX Quote)Fidelity Select Energy Service Portfolio (FSENX), was one of three fund managers to speak Thursday morning about what they see as the major trends in the commodity markets and how they structure their funds to capture returns.

"Whether it was aberrantly low price for the past 20 years, or whether it's a structural shift in demand in certain countries, every commodity has been going up," said Dowd. "The cost of building a refinery has doubled, the cost of building copper mines has increased and all have seen underlying inflation. Do I incorporate that into my equation? Yes. Do I want to pay for it? No. I want the companies that will prosper, but won't see the rising costs." ...