Fund Research

BlackRock Commodities Income

02 February 2018 View latest version

Summary

BlackRock Commodities Income (BRCI) has a conviction-led portfolio, with the managers aiming to generate a high income from the global mining and energy sectors. The managers have flexibility to use fixed income and option writing to boost income when the opportunity arises.

Managed by Olivia Markham and Tom Holl, BRCI has typically run with a quality bias thanks largely to the income mandate. This has meant that the trust has outperformed many of its peers over the medium term, as it protected capital far more effectively during the severe down cycle for natural resources between 2011 and 2015. Latterly, this defensive positioning has meant that BRCI has struggled over the course of 2017, generating a NAV total return of 1.9%, relative to the HSBC Global Mining index return of 20.9% and the 5.6% from the reference benchmark of a 50/50 combination of the MSCI World Energy & MSCI World Metals & Mining Indices.

Income has been (and continues to be) a key selling point for the trust. However, the past two years has seen the board reduce the dividend from 6p paid in 2015 to the current level of 4p. The managers sound hopeful that 2017 will prove to be the nadir. The managers have previously stated that they expect a lower contribution from option writing going forward, and the recent results posted at the end of January show a modest improvement since last year, with the revenue return increasing to 4.84p from 4.43p...

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Fund History: BlackRock Commodities Income

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