Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by BlackRock World Mining. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

Over the 25+ years that it has been in existence, the BlackRock team that have been managing this trust has demonstrated a strong track-record, and is one of the most experienced teams of specialist investors in the metals and mining sector, globally. Echoing the wider sector in which they invest, income has increasingly become a more important part of the total-returns objective. The board’s view is that a “significant” dividend will serve as an effective discount control mechanism over time.

Currently, the managers believe the wider market is underestimating the mining sector’s resolve to maintain capital discipline, deliver dividends and buybacks to shareholders, and only pursue value accretive growth opportunities. This theme remains the mainstay of the portfolio, with “mega-cap” diversified miners forming 45% of the portfolio, and five of the top ten holdings. Their positions as the globe’s lowest cost producers means that their prodigious cash-flows, having been previously used to repay debts, are now increasingly being used to reward shareholders.

The thesis behind BRWM has always been that investors would benefit from an investment trust that offered exposure to different commodities, but with much greater flexibility to shift allocations between commodities than the listed diversified miners that own mines rather than shares in other companies. The current commodity breakdown reflects this, especially the managers' positioning in what they describe as “sustainable metals” and “green metals" – themes that the managers are gradually building up exposure to, and which constitute 4% of the portfolio. The sustainable metals theme offers shareholders exposure to the huge changes that will occur with the rise of electric vehicles (EVs), and includes companies that produce metals for cathodes in batteries, such as lithium, cobalt and nickel. Green metals is another environmentally-related theme. The managers' thesis is that the environment, carbon footprint and energy efficiency will increasingly be factors impacting the price of commodities, with the managers positioning themselves to be more exposed to those miners that own high grade iron ore, which results in less waste, energy and processing to produce products than competitors.

BRWM’s outperformance has usually been achieved during periods of positive sentiment. 2016 and 2017 gave grounds for optimism on performance, but over five years, the trust is marginally behind the benchmark, with much of the underperformance attributable to the write-off of the Marampa royalty in the summer of 2014. So far this year, performance has been challenging, with the trust lagging the benchmark due to the Vale tailings dam failure and the strong rally in pure play iron ore names.

The trust’s historic dividend yield is 5.5%. The managers use the company’s low-cost gearing to ensure that investors have a full exposure to equities, but benefit from a diversified income stream stemming from other investments in fixed income, a recently significantly increased holding in an illiquid royalty-type debenture and the unquoted Avanco royalty contract (which has been renamed the OZ Minerals Brazil royalty following the acquisition of Avanco in 2018). Aside from these revenue sources, the managers also make use of option writing to boost income from the portfolio, which helps them achieve a yield premium to the benchmark.

In the managers' view, 2018 was the first time that underlying portfolio holdings’ managements had the latitude and the opportunity to prove their commitment to capital discipline and put shareholders first. Strong dividends received by the trust tell their own story, and so Olivia Markham (co-manager) is optimistic that managements will not give back the credibility they have won so far, and that the dividend path – assuming spot prices for commodities don’t weaken significantly – remains on an upward trajectory. The yield of 5.5% compares very well in our view to other Global Equity Income trusts (average yield 4%) and the IA Global Equity Income sector, which currently has a median yield of 3.14% (according to data from Morningstar). In fact, with a yield of 5.5%, the trust is amongst the very highest yielding equity trusts in the entire investment trust sector.

The trust’s discount has remained resolutely wider than the 10% level, and currently sits at around 12%. However, the discount has started to move in gently from it’s lows. The board last bought shares back at a discount of c.14.9% in October 2018, and so the narrowing discount since then could suggest the tide of buying interest has turned, with investors perhaps now recognising the attractive yield and prospects for the trust.

Kepler View

BRWM remains a pre-eminent vehicle for those looking for exposure to metals and mining. Recent performance has been moderately disappointing, but not entirely unexpected in our view given the historic pattern of outperformance during positive periods for the sector.

The managers continue to note that the mining sector remains under-owned by generalist investors. Olivia tells us that the diversified miners are trading on low ratings of c. 4.5x - 5.5x on an EV / EBITDA basis, compared to a historic average of 6.5x. With net debt having been significantly reduced, these companies have less financial risk but are throwing off significant free cashflow which can be used for dividends, buybacks or special dividends.

As we have observed before, should an improvement in sentiment occur, the discount should narrow. In the meantime, the current dividend yield of 5.5% is attractive compared to Equity Income funds and trusts. The board has showed its willingness to buy shares back historically at levels marginally wider than the shares currently trade, which could provide a degree of reassurance to the share price rating on the downside. As such, the combination of a high yield and wide discount in absolute terms, looks attractive.

BULL
BEAR
Large liquid trust in a specialist sector, using structure’s flexibility
Volatile NAV, likely to be impacted strongly by Chinese sentiment (for good or bad)
Dividend yield attractive
Concentrated portfolio, in a relatively narrow sector
Discount is wide in absolute and relative terms


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2024 Kepler Income & Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for income & growth... Find out more

Fund History

01 Nov 2024 Artificial intelligence & mined commodities: How the future and the past work together
AI and mining: A relationship boosting efficiency and powering data centres...
30 Oct 2024 Cream of the crop
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21 Oct 2024 Monthly roundup: news on CHRY and ATST, highlights of our latest webinar series and the most popular investments in September
Jo and Ryan discuss the latest news, reviews and interviews in the investment trust world...
16 Oct 2024 Trust Issues: Investing in commodities with BRWM manager Olivia Markham
We speak to Olivia Markham, co-manager of BlackRock World Mining, about the opportunity for investors in the commodities sector...
09 Oct 2024 Going, going, gold!
We ask if gold can continue to rise from all-time highs…
28 Sep 2024 Mined commodities are speeding up the energy transition
Mining has a reputation as a cyclical sector, expanding when economic growth is buoyant and slipping as economies contract. However, today, the dynamics of the mining sector are more complex and nuanced, with the energy transition, shifting geopolitics and even the AI revolution changing the demand patterns for mined commodities...
08 Aug 2024 Monthly roundup: private equity dealings and highlights from July's small cap event 'encore'
Jo and Ryan discuss the latest news, reviews and interviews in the investment trust world...
24 May 2024 BlackRock World Mining Trust: A Look Ahead for 2024
The mining sector is not homogenous. On the BlackRock World Mining Trust, we believe this year its fortunes may be particularly disparate, as a range of factors weigh on individual commodities and regions. As we see it, there are three key factors that will determine the performance of mining companies for the remainder of 2024: geopolitics, global growth and infrastructure spending...
24 Apr 2024 Is ESG finished?
Two of our analysts debate whether it’s time to give up on ESG…
16 Apr 2024 The pet rock is proving its worth
Gold miners are finally responding to record high gold prices…
12 Apr 2024 Fund Analysis
BRWM’s managers: we see all the classic signs of high commodity prices...
18 Mar 2024 Results analysis: BlackRock World Mining
BRWM: Green demand is supporting commodity prices while China is weak…
13 Mar 2024 Roller coaster ride
Thematic funds have seen significant outflows over the past two years…
18 Mar 2024 BlackRock World Mining
Evy Hambro
Rewatch this webinar as part of our month-long online series 'Themes for your ISA in 2024' hosted by the team at Kepler Trust Intelligence throughout March...
Watch Recording
14 Feb 2024 Rise of the Machines
We look at some potentially exciting technology themes outside of the AI realm and share ways for investors to gain exposure without the hefty price tag…
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
01 Nov 2023 Back to basics
Higher rates mean re-visiting portfolio construction...
30 Oct 2023 BlackRock World Mining
Evy Hambro
Rewatch this webinar which was part of our October and November online event 'The Best of BlackRock'...
Watch Recording
23 Jun 2023 Fund Analysis
BRWM remains well placed to benefit from tight commodity markets…
02 Jun 2023 Demand for mined commodities from the energy transition
After a strong year for the mining sector in 2022, supply and demand dynamics are likely to remain favourable in the year ahead, with gold acting as a ballast for the portfolio, says Olivia Markham, manager of the BlackRock World Mining Trust…
16 Mar 2023 Diversity matters
We examine the effect of blending multiple funds within your regional allocation and find that – while the culture wars may rumble on elsewhere – the benefits of diversity for investors are unarguable…
08 Mar 2023 The next supercycle
Our research suggests a structrual tailwind could support the prospects for commodities throughout the next decade...
07 Mar 2023 Results analysis: BlackRock World Mining
2022 represented another strong year for BRWM’s NAV and share price…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
16 Dec 2022 Fund Analysis
BRWM can be seen as a diversified and nimble virtual mining company…
18 Nov 2022 The mining sector: cyclical weakness versus structural strength
It has been a tougher time for certain commodities in recent months as fears over the global economy mount. The longer-term outlook for the mining sector is still buoyant, argues Evy Hambro, co-manager of the BlackRock World Mining Trust...
01 Jun 2022 Fund Analysis
BRWM is providing the best of both worlds: growth and income…
11 May 2022 Catch a tiger by the tail
As inflation bites harder than it has for decades, we consider the best ways for investors to hang on to their capital...
29 Apr 2022 Commodities: how the energy transition is changing the sector
Global commitments to net zero are changing the landscape for commodities, says Olivia Markham, Co-Manager of the BlackRock World Mining Trust plc. This creates a strong backdrop for the year ahead...
25 Mar 2022 Slides and Audio: BlackRock World Mining
Download the presentation and listen to the audio from our 'Ideas for your ISA' virtual Spring event on 17 March...
23 Mar 2022 Fifteen ideas for your ISA
Slides and audio from our event last week, featuring fund managers running money in every major market in the world...
17 Mar 2022 It's the end of the world as we know it
We examine five potential themes for investors seeking long-term returns in a troubled and uncertain world...
11 Mar 2022 Results analysis: BlackRock World Mining
BRWM reports another strong year, and a dividend increase of 109%...
23 Feb 2022 Regime change
Ahead of our spring conference, we ask whether investors need to junk their portfolios and start again…
29 Sep 2021 Fund Analysis
Tailwinds behind BRWM seem undiminished, yet the shares are back on a discount...
21 Jul 2021 Is there room to run in the commodities cycle?
It has been a bumper time for commodities as the global economy recovers and infrastructure programmes support demand, but - says Olivia Markham, Co-Manager of the BlackRock World Mining Trust plc - there is still plenty of scope for growth...
30 Jun 2021 Inflation – a real threat or hot air?
Two of our analysts ask whether recent high inflation numbers indicate something long-lasting and troubling is happening…
10 Jun 2021 Green is good!
2021 will see billions dedicated to sustainable initiatives, which brings with it a host of possible investment opportunities...
26 Mar 2021 Mining in 2021: the start of a new cycle?
After a good year in 2020, the mining sector is only in the foothills of a new cycle, driven by economic recovery and green infrastructure investment, says Evy Hambro, Co-Manager of the BlackRock World Mining Trust plc.
24 Mar 2021 Gold is money, everything else is on Reddit
Initial winners in the COVID-19 crisis, gold bullion and gold miners pulled back over H2 2020. Is now an opportune moment to build exposure...
24 Mar 2021 Shoot to Thrill: ISA targets for long term growth
We all intend to invest for the long-term but can often be distracted by the news...
12 Mar 2021 Results analysis: BlackRock World Mining
BRWM has delivered strong returns and could continue to do so given the number of tailwinds behind the strategy……
11 Mar 2021 Slides and Audio: BlackRock World Mining
Download the presentation and listen to the audio from our 'Ideas for your ISA' Spring Conference on 03 March...
10 Mar 2021 Spring Conference '21
Audio and presentations from 21 of the UK’s leading investment trust managers…
10 Feb 2021 Fund Analysis
BRWM is exposed to several powerful themes, and the discount has narrowed decisively…
10 Feb 2021 Eye of the Pfizer
Mining shares have rallied in recent months. With further potential, what impact could this have on the relative returns of active UK Small cap strategies...
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
06 Jan 2021 This time next year Rodney...
We review the performance of the team’s ‘top picks’ for 2020 – including some proper plonkers – and place our bets for the year ahead…
09 Dec 2020 A bumper harvest?
Agricultural and industrial commodities have rallied strongly, but what are the implications for emerging market allocations...?
11 Nov 2020 Rebuilding after COVID-19: the role of the mining sector
We hear from Olivia Markham, Co-Manager, on how significant budgets from governments worldwide are allocating to infrastructure and a greener economy in the wake of COVID-19 and what this could mean for BlackRock World Mining Trust...
29 Oct 2020 Fund Analysis
BRWM offers a unique exposure to themes which look increasingly attractive, on a discount of 11%...
24 Sep 2020 Bull in the Chinese market?
The Chinese stock market has been a notable winner thus far in 2020. Should investors stay the course, or take profits?
26 Aug 2020 Trump v. Biden
Two of our analysts debate who will win the US election and what that means for markets…
19 Aug 2020 Has the time come for Europe?
With mutual eurozone debt established all eyes are on the continent once more; but what will drive relative returns?
29 Jul 2020 To be, or not to be (geared), that is the question
Gearing is part of the toolkit that trusts use to outperform OEICs. But how is it best implemented?...
21 Jul 2020 A game of four quarters
Seven trusts, two quarters. Are our team still happy with their trust picks for 2020?
01 Jul 2020 Oh the humanity...
We consider two strategies to cope with markets which, boosted by massive government support, may be witnessing the start of a ‘melt-up’ which may be followed swiftly by a melt-down...
02 Jun 2020 Mining: resilience in a crisis
The fortunes of the mining sector are often associated with economic growth but on the BlackRock World Mining Trust plc, we believe the inherent strength of mining companies has been widely underestimated...
27 May 2020 Fund Analysis
Sharply increased exposure to gold, and wide discount, make BRWM attractive in current environment…
29 Apr 2020 On solid ground
Our analysis of discounts highlights trusts which are likely to offer significantly less discount downside from the current level…
25 Mar 2020 Of mice and men
Our ‘best laid plans’ have somewhat ‘gang aglay’ since the KTI team put forward its best ideas for 2020 in early January…
02 Jan 2020 Crystal Balls
Drunk on our success in choosing funds to perform well in 2019, the team at Kepler Trust Intelligence is back at the table with a glint in its eye…
08 Nov 2019 Global megatrends and mining
30 Oct 2019 All that glitters? The case for and against gold
Two of our analysts go head-to-head, debating whether gold is the ultimate safe haven asset...
23 Oct 2019 Fund Analysis
BRWM's wide discount to NAV, in an already under-owned sector, could offer potential for a rerating...
16 Oct 2019 Life on Mars: could inflation take us back to the '70s?
We discuss two potential catalysts for inflation - and the assets that could offer a hedge against it...
04 Jun 2019 Fund Analysis
BRWM provides a diversified investment in mining and metal assets worldwide, actively managed with the objective of maximising total returns...
02 Jan 2019 Can metals be made to shine?
The team at BlackRock World Mining say lessons have been learned from the recent downturn, and highlight opportunities they see in the sector...
02 Jan 2019 Olivia Markham: The case for energy
Confidence is returning to the energy sector, says portfolio manager Olivia Markham, while mining may not have reached its peak...
24 Dec 2018 Why did the chicken cross the road?
Because he was so bored of reading newspapers devoted entirely to Brexit he was hoping he’d be hit by a truck.
05 Dec 2018 Surf's up
As rough markets drive share price volatility up, we use a proprietary statistical technique to highlight trusts which have rarely looked cheaper...
26 Nov 2018 Fund Analysis
Celebrating its 25th anniversary this year, the team has demonstrated a strong track-record and is now one of the most experienced specialist teams globally
26 Mar 2018 Electric dreams
The global shift toward electrification could spark many opportunities…
22 Mar 2018 The search for discounted yield
We scour the investment trust universe for trusts offering chunky yields on a discount...
14 Mar 2018 Fund Analysis
2017 represented a return to outperformance for the managers, as well as marking another very strong performance in absolute terms
27 Sep 2017 Winners and losers from tomorrow’s world
Searching for the Tesla of tomorrow…
27 Sep 2017 Not the usual suspects...
As equity valuations continue to defy logic, we identify the trusts least correlated to their fortunes...
19 Jun 2017 The investment trust advantage...
Our event in June saw eight of the UK's most experienced fund managers discuss the outlook for each major asset class...
12 Jun 2017 Fund Analysis
21 May 2017 Brave new world
We ask the top managers in each sector, region and asset class where they see the opportunities in the months ahead...
25 Apr 2017 Fund Analysis
16 Nov 2016 Fantastic income (where to find it)
We reveal the true extent of stock concentration among UK equity income funds and identify three trusts which offer a fantastic alternative...
01 Nov 2016 Fund Analysis
An update of the BlackRock World Mining investment trust including share price performance, discount, dividend, premium, asset allocation and gearing analysis...
13 Oct 2015 Analyst
Our roundup of the experts' views sees light at the end of the mineshaft for BlackRock World Mining, and a return to form for Harry Nimmo...
08 Sep 2015 Fidelity Special Values smashes it
Fidelity Special Values, one of the five ‘contrarian plays on big discounts’ we highlighted in April, has come in sharply since we tipped it for greatness.
05 Jun 2015 On the rebound
Contrarian investment ideas on big discounts.
05 Jun 2015 Fund Analysis
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