The vehicle, which has been managed by Evy Hambro since May 2009, has outperformed the average investment trust in its IT Commodities & Natural Resources sector by 68.3 per cent in the last 10 years.
It has also marginally beaten its sector over a five-year period, though returns have waned in the last three years or so. The vehicle suffered particularly badly during the financial crisis; according to data from FE Analytics, it lost more than 61 per cent in 2008.
Performance of trust vs sector over 10-yrs
| Name |
1-yr returns (%) |
3-yr returns (%) |
5-yr returns (%) |
10-yr returns (%) |
| BlackRock World Mining IT |
28.87 |
7.54 |
105.42 |
716.56 |
| IT Commodities & Nat Resources |
30.37 |
14.86 |
103.06 |
648.26 |
Source: FE Analytics
Graham Birch had headed up the vehicle for more than 16 years prior to Hambro’s appointment. Since he took the reigns just over two years ago, Hambro has returned more than 100 per cent to investors – 17.49 per cent more than his peer group.
The investment trust has also outperformed BlackRock Gold & General – Hambro’s other multi-billion pound product – since the manager took over from Birch. According to FE Analytics data, the open-ended fund has returned 60.42 per cent since May 2009, though it has been substantially less volatile than the investment trust.
Though the risks involved with the mining sector are well documented, BlackRock World Mining is particularly volatile. According to our data, it has a volatility of 36.95 per cent over 10 years, compared with 28.8 per cent from its sector average.
By comparison, the MSCI Emerging Market index has a volatility of 22.63 per cent over the same period.
Performance of trust vs sector over 10-yrs
Source: FE Analytics
The investment trust has a regionally diversified portfolio, with stocks listed in Australia, the Middle East, South America and beyond.
It can hold up to 10 per cent in physical metals, but the rest of the portfolio should be invested in equities associated with the mining industry. Rio Tinto and BHP Billiton have the biggest weighting in the portfolio at present.
The mining sector has had a tough time in the last two months. A number of macro headwinds, including the European sovereign debt crisis, have challenged equity markets, leading to a broad-based "risk-off" trade.
This has had a big impact on the short-term prospects of commodity prices, with many metals and minerals declining sharply. The silver price fell by more than 20 per cent in May, for example.
These pressures have taken their toll on the trust’s performance this year. According to FE Analytics data, BlackRock World Mining has lost 7.51 per cent so far in 2011. It is currently trading on a discount of 17.22 per cent – substantially higher than its one-year average of 14.8 per cent.
However, Hambro thinks the commodities that his portfolio is significantly exposed to are still well supported.
He commented: "The fundamentals for our favoured commodities continue to look attractive. The strength of those fundamentals are not being fully reflected in equity valuations, which look attractive not only on a historical basis but also when considered in light of the exceptional levels of free cashflow mining companies are able to generate at the moment."
"The trends of more mergers and acquisition activity, as well as returns to shareholders in the form of dividends and share buybacks, are likely to get further traction in the second half of the year."