Why This Fund Manager Says the Commodity Cycle Is Just Getting Started

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Ki-Un Park is bullish on commodities. That does not mean he is in a hurry to buy them.

A little more than two months after launching the Straits Invest Elementum Fund, Park said as much as roughly 70% of the young fund remained in cash, liquidity and money-market holdings as he waited for opportunities.

"We are keeping our powder dry," Park said.

That patience might seem unusual for a fund built around commodities at a time when metals have already attracted considerable investor attention. But it reflects an investment philosophy Park said was shaped over roughly two decades in private banking and portfolio management.

Park said he believes the commodity cycle is just getting started, pointing to opportunities in critical minerals and mining equities that he believes have yet to fully reflect the broader rally.

For him, identifying the trend is only part of the job. The harder question is deciding where within that trend the risk is worth taking.

From Private Banking to a Commodity Fund

Founded in 2003, Singapore-based Straits Invest Pte. Ltd. provides independent asset management services to high-net-worth and ultra-high-net-worth individuals as well as institutional clients.

Park, who took over leadership of the firm before the COVID-19 pandemic, described Straits Invest as having two complementary business pillars.

The first is its external asset management and multifamily office business, operating under a Capital Markets Services license issued by the Monetary Authority of Singapore. The second is its fund business.

The Elementum Fund grew directly out of the first.

"The investment idea of the Elementum Fund was born out of the portfolio management business we had for many, many years," Park said.

Rather than developing an entirely new investment philosophy, Straits Invest condensed an approach it had already been applying through its portfolio management business into a fund designed to reach investors beyond its existing client base.

The Straits Invest Elementum Fund launched on July 16 under Altius Capital VCC. (VCCs are Singapore’s regulated corporate structure for investment funds, comparable in purpose to Luxembourg SICAVs.) Park said the fund had approximately 6.8 million in assets under management at the time of the interview and was aiming to reach approximately 10 million by the end of the year.

Initially, Straits Invest focused on existing clients, friends, and family. Park said the firm wanted to establish a track record before pursuing a broader base of institutional investors and larger families.

Building Around Commodities

Elementum uses what Park described as a core-satellite strategy. Up to 80% of the fund can be allocated to commodities and commodity-related investments, including ETFs, publicly traded equities and unlisted companies across areas ranging from precious and industrial metals to soft commodities.

The remaining allocation can be directed toward investments outside the commodity thesis, including areas such as cybersecurity and artificial intelligence.

Park said the satellite strategy was intended to provide exposure to assets that do not share the same risk profile as commodities, helping balance the portfolio while potentially adding another source of returns.

At the center of the strategy, however, is Park's conviction that commodities have further to run. Gold and silver occupy a particularly important place.

"I believe in gold and silver as the base, as the fundament of every fund who claims to be a commodity fund like ours," Park said.

Even there, he is particular about how the fund gains exposure.

Park said physical backing was an important consideration when selecting the fund's gold and silver ETFs. He contrasted those investments with simply owning what he called "paper gold" or "paper silver."

"It gives me a little bit of comfort," he said. "It gives my clients a similar level of comfort."

Using physically backed ETFs also allows the fund to avoid some of the practical complications Park associated with owning bullion directly, including storage costs and moving physical metal.

A Different Definition of Risk

Park's portfolio decisions become easier to understand once he explains what "risk" means to him. It is not primarily volatility.

"I consider risk not in the form of volatility," Park said. "I define risk as the chance to lose everything."

That philosophy helps explain how Elementum can combine established precious-metals exposure with much earlier-stage investments, provided the size of those positions reflects their risk.

One example is Krait Critical Minerals Corp. (KRIT: CSE; U0S:FSE).

Park said the Krait opportunity was introduced to him by a longtime friend who knew the Elementum strategy. While Straits Invest can spend weeks or even months following prospective investments before committing capital, Park said it took him only a day or two to decide he wanted exposure to Krait.

He was also explicit about the speculative nature of the investment.

"From an asset manager risk perspective, I treat this Krait holding, this position, as a call option, to be very frank, because it's so early stage," Park said. (Park used 'call option' as an analogy for a small, speculative investment with substantial potential upside, while recognizing that the entire amount invested could be lost.)

Given the fund's size and Krait's early stage, Park said Straits Invest kept its initial exposure relatively small. He also said the firm would most likely participate in Krait's next capital round.

The attraction was partly the opportunity to gain exposure to a segment of the commodity market that Park found difficult to access elsewhere.

Straits Invest already had ways to invest in precious metals, traditional industrial metals, and other areas of the commodity market. Krait offered something different.

"This is something we didn't have in the portfolio," Park said.

Krait's portfolio includes the Goldbar Spider Lake Project in Ontario and U.S.-based antimony interests in Washington State. The company acquired Nevada Hills Antimony LLC in September, giving it contractual interests related to the Bales Antimony Project as well as interests in the Antimony Bell Project and other related assets in Washington.

For Park, that type of critical-minerals exposure fit the broader direction he expects commodity markets to take.

He said commodities beyond the traditional precious and industrial metals could become an increasingly important part of the mix in the near future.

Antimony illustrates why the current critical-minerals cycle may have more room to run. Global production is concentrated among a relatively small number of countries, while China's export restrictions have highlighted the risks of depending on foreign suppliers for materials essential to defense and manufacturing. Unlike a demand surge that can be addressed quickly by increasing production, rebuilding domestic mining and processing capacity can take years. That creates the potential for a prolonged investment cycle as governments and manufacturers seek more secure supply chains.

But Krait's assets were only part of the decision.

The People Behind the Investment

Park repeatedly returned to another part of the Straits Invest philosophy: knowing the people on the other side of an investment.

His introduction to Krait came through someone he already knew and trusted. That relationship subsequently gave Park direct access to Krait CEO Oscar Mendoza, which Park said became an important factor in his decision. That approach extends well beyond Krait.

Whether Straits Invest is dealing with an investment manager, bank, auditor, service provider, or other important counterparty, Park said someone in the firm's leadership generally knows the founder, principal, or owner personally.

"We know the counterparty, the founder, the principal, or the owner, or a combination of all three personally," Park said.

Its position as a boutique asset manager helps make that possible. Park pointed to a network developed over decades, particularly in Europe and Asia, as an important part of how the firm operates.

Personal relationships do not eliminate risk, he acknowledged. Investments can still fail, and business problems can still emerge. But direct relationships can make those problems easier to address.

"There will be problems, but you can smooth out problems faster," Park said. "You have a certain level of trust."

The same emphasis on research and relationships applies to more established investments.

Park said Straits Invest sometimes follows prospective holdings for months before investing. He cited Baker Steel as an example, saying the firm monitored the investment manager for more than half a year, conducted research, and met its key people personally before allocating capital from managed client portfolios to Baker Steel's precious metals fund

Royal Gold Inc. (RGLD:NASDAQ) was another investment Park discussed. More broadly, he said he saw substantial potential in mining equities relative to underlying commodity prices, pointing to factors including free cash flow, metal prices, and costs.

The distinction matters because rising metal prices do not always translate immediately into higher mining share prices. For established producers, however, stronger commodity prices can increase operating margins and free cash flow when production costs remain relatively stable. That additional cash can support debt reduction, expansion and shareholder returns, potentially making mining equities more attractive even if metal prices stop climbing. Park's view suggests that the opportunity lies not only in higher commodity prices, but also in the possibility that mining stocks have yet to fully reflect the financial benefits of the rally.

Keeping the Powder Dry

Perhaps the most revealing thing about Elementum, however, is how much it had yet to invest.

At the time of the interview, Park said the fund held only about eight to 10 positions and remained as much as roughly 70% in liquidity, cash and money-market holdings.

For someone convinced that a new commodity cycle is underway, that restraint is deliberate.

Elementum can own established commodity investments. It can make smaller bets on early-stage opportunities such as Krait. And it can move beyond commodities when Park sees an investment capable of diversifying the portfolio.

What it does not have to do is deploy capital simply because that capital is available. Park said the fund was waiting for trends and signals before gradually building positions, looking to take advantage when market pullbacks created opportunities.

That may be the clearest expression of the strategy Park spent years developing before Elementum existed. He believes the commodity cycle is just getting started.

He is willing to wait for his shots.