It is coming up to three years since Birch retired from his role as head of natural resources at BlackRock in April 2009. While many feared the £1.17bn trust would find it difficult to emulate the kind of performance that has seen it return more than 468 per cent in the last decade, Evy Hambro has done a great job since taking over as lead manager.
Performance of trust vs benchmark over 3-yrs
Source: FE Analytics
According to FE data, the portfolio has delivered 97.02 per cent over three years, compared with 59.90 per cent from its HSBC Global Mining benchmark. Hambro’s trust has also been less volatile than the index and lost 5.44 per cent less during the down market of 2011.
In the three years previous to Hambro’s appointment, the trust underperformed its benchmark, with losses of 9.42 per cent. This was largely due to poor performance during the global financial crisis, which saw it lose more than 60 per cent in 2008 alone.
However, the trust handled the challenging market conditions in 2011 far better than in 2008.
Year-on-year performance of trust vs benchmark
| Name |
2012 (%) | 2011 (%) | 2010 (%) |
2009 (%) |
2008 (%) |
2007 (%) |
| BlackRock World Mining IT |
6.45 |
-21.55 |
48.49 |
122.18 |
-61.13 |
48.96 |
| HSBC Global Mining Index |
1.42 |
-26.99 | 35.6 |
83.53 |
-15.06 |
5.07 |
Source: FE Analytics
Three commodities trusts – New City Energy, City Natural Resources High Yield and Golden Prospect Precious Metal – have returned more than Hambro over three years, but all of these are significantly more volatile, and lost far more last year.
BlackRock World Mining has taken on more of an income focus since Hambro took over from Birch. In February this year, the trust increased its dividend payout from 6p a share to 14p – a jump of 133 per cent.
According to FE Analytics data, the portfolio currently has a one-year historic yield of 2.12 per cent. Despite the greater yield, Hambro has assured investors that he will not change the trust’s focus on high growth.
Kieran Drake, investment trust analyst at Winterflood Securities, says he has been impressed with BlackRock World Mining since Hambro’s appointment as lead manager.
"The trust has a brilliant track record, and Hambro is a manager we rate very highly," he said. "It’s important to remember that Hambro was on the team for a while before being made lead manager, which obviously helped with the settling-in process."
Winterflood has taken BlackRock World Mining off its recommended list in recent months in favour of City Natural Resources. However, Drake says this has nothing to do with Hambro’s performance since April 2009.
"Our decision is a positive move for City Natural Resources, not because there is anything wrong with Hambro’s process," he explained.
Hambro has a preference for diversified mining stocks, which derive their profits from a number of areas. The portfolio is currently underweight gold and overweight copper, due to supply-side disruptions and an end of destocking in China.
The manager runs a highly concentrated portfolio, with more than half of its assets invested in the 10 largest companies. Rio Tinto and BHP Billiton are currently Hambro’s biggest positions, with a weighting of 9.2 and 8.1 per cent respectively.
The trust has a total expense ratio (TER) of 1.42 per cent.