Four of the five portfolios are under the management of New City Investment Managers, with FE Alpha Manager Evy Hambro’s BlackRock World Mining IT taking the final spot.
CF Ruffer Baker Steel Gold and Thesis Australian Natural Resources are the best-performing open-ended funds over the three years, but their returns haven’t come close to matching the likes of New City Energy and City Natural Resources High Yield.
Performance of open- and closed-ended funds over 3-yrs
| Name |
3yr (%) |
| New City Energy |
151.79 |
| City Natural Resources High Yield Trust |
134.2 |
| Golden Prospect Precious Metal |
108.64 |
| BlackRock World Mining IT |
97.02 |
| Geiger Counter |
94.59 |
| CF Ruffer - Baker Steel Gold |
88.8 |
| Thesis - Australian Natural Resources |
79.93 |
| Smith & Williamson - Global Gold & Resources |
76.61 |
| JPM - Natural Resources |
76.09 |
| Allianz - RCM Global Agricultural Trends |
70.33 |
Source: FE Analytics
Investment trusts have also trumped their open-ended counterparts over the longer-term; according to FE Trustnet, City Natural Resources High Yield tops the group over five years with returns of 90.11 per cent, while Hambro’s BlackRock World Mining trust takes the number-one spot over a 10-year period, with returns exceeding 478 per cent.
While the vehicles in question have different focuses and are difficult to compare, the study highlights the high-growth options many investors are missing out on by automatically discounting investment trusts.
BlackRock Commodities Income is another worthwhile option. Although it cannot compete with other commodities trusts in terms of total returns during rising markets, its one-year historic yield of 4.1 per cent makes it an appealing prospect for investors looking for regular income as well as decent capital growth.
It is also significantly less volatile than the majority of its competitors and lost less during both 2008 and 2011.
Performance of trusts over 5-yrs
Source: FE Analytics
Investment trust analyst Winterflood Securities favours City Natural Resources High Yield in the IT Commodities & Natural Resources sector, despite its greater volatility.
"BlackRock World Mining was on our buy-list for a very long time, but in January this year we decided to remove the portfolio in favour of City Natural Resources High Yield," said Winterflood’s Kieran Drake.
"It is currently managed by Will Smith and Ian Francis, following the departure of Merfyn Roberts, and aims to generate capital growth and income by investing in small and mid cap mining and resources companies. The trust predominantly invests in equities, however the portfolio also contains convertibles and fixed interest securities to enable it to pay a yield of 1.8 per cent at the current price."
City Natural Resources features more than 180 holdings, with the top-10 accounting for 25 per cent of gross assets and the top-20 accounting for 39 per cent. Around 80 per cent of the portfolio is in equities, with the remainder in fixed interest securities of small and mid cap resource companies.
Commenting on the trust’s performance, Drake said: "The trust has an excellent if volatile performance record. Despite investing in a highly volatile sector of mid and small cap resource companies, it has done a good job of protecting shareholders’ capital in difficult markets over the last year."
"It is currently on a 14 per cent discount, which is in line with its one-year average, while the BlackRock trust is on 12 per cent, which is a little tighter than it has been," he added.
Another commodities trust that is generating interest is the Baker Steel Resources Trust – a £78.4m portfolio that invests in unlisted, pre-IPO resources stocks. According to FE data, it is the best-performing of all the open- and closed-ended funds so far in 2012, with returns of just under 47 per cent.
However the risks involved with investing in unlisted companies mean that it is not for the faint hearted.
Performance of fund since launch
Source: FE Analytics
It is one of the most volatile trusts in the entire AIC Investment Companies universe since its launch in April 2012, and lost more than 20 per cent in December 2011 alone.
The recent surge in performance has seen the trust’s discount narrow from a high of 40 per cent to 9 per cent at the time of writing.