Fund Profile

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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

The objective of BlackRock World Mining (BRWM) is ‘to maximise total real returns to shareholders through a world-wide portfolio of mining and metal securities’. Income has become a more important part of the total returns objective, and the board’s view is that a ‘significant’ dividend will serve as an effective discount control mechanism over time.

BRWM uses all of the tools available to it as an investment trust, a clear differentiator to peers. Chief among these is the managers’ ability to make private royalty investments, which are now starting to contribute meaningfully to returns to shareholders. The managers also invest in fixed income which serves as a useful boost to returns, and to write covered call options on an opportunistic basis to generate extra income. The managers aim to use gearing so that, broadly speaking, investors maintain a fully invested exposure to equities, but achieve much greater diversification than would otherwise be the case.

One of the central tenets of investing in BRWM for metals and mining exposure is that the managers can deploy the company’s assets to different commodities in a far more nimble and opportunistic way than the large listed diversified miners. Illustrating this, one of the key themes in the portfolio currently is exposure to gold and precious metals. The managers have been adding to positions over the last year, such that gold now makes up 26.6% of the portfolio, an increase from 13% a year ago.

A long-running theme in the portfolio is that the wider market is underestimating the mining sector’s resolve to maintain capital discipline, to deliver dividends and buybacks to shareholders, and to pursue only value-accretive growth opportunities. As evidenced by the trust’s strong income flow so far this year, the managers’ view has been proved correct, and prodigious cash flows are being used to reward shareholders in the form of special dividends.

The trust’s historic dividend yield is 5.2%. Over the six months to 30 June 2019, BRWM’s net revenue earnings (including specials) amounted to 11.43p per share, an increase of 23% over the same period last year. The board has committed to pay out substantially all of the trust’s income in dividends, which means that the entire increase in income is likely to flow through to dividends.

The trust’s discount has remained resolutely wide. The board has been buying shares back, most recently on 26 September 2019 at a discount of 15.2%.

Analyst's View

BlackRock World Mining remains the largest trust offering exposure to the metals and mining sectors in the sector. The fact that the mining sector as a whole is under-owned, and has lagged behind wider equity markets, appeals to the contrarian in us. Certainly the travails of the sector in 2015 appear to be a thing of the past. Having substantially de-geared, companies are on a much more sustainable footing, and are now starting to pay out large chunks of earnings as dividends, which is reflected in BRWM’s bulging income account. With interest rates now perhaps less likely to increase any time soon, the trust’s dividend yield and increased exposure to gold look particularly noteworthy.

Our relatively crude analysis (taking the difference between the cum-income and ex-income NAVs) suggests that so far BRWM has undistributed income of around 11.7p per share on the balance sheet. Assuming income over the rest of the year covers costs, and therefore that no further income is available for distribution, this analysis suggests that the full year dividend will be in the order of 19.7p, representing an increase of 10% over 2018. Clearly much can change between now and the year-end, but this projection serves to highlight that the revenue account is in a good position.

The historic yield of 5.2% compares very well, in our view, to other Global Equity Income trusts (average yield 3.9%) and the IA Global Equity Income sector, which currently has a median yield of 3.1% according to data from Morningstar. In fact, with a yield of 5.2%, the trust is among the very highest yielding equity trusts in the wider investment trust sector. This yield is to some extent underpinned by revenue reserves of 0.72x (based on a dividend of 18p).

As well as a very high yield, BRWM also continues to trade at a significant discount to NAV, both in absolute terms and relative to its own history. The board has been buying shares back at a discount of 15.2%, which could provide shareholders with a degree of downside reassurance at the current level. Should sentiment towards the sector improve, the discount could narrow. In the meantime, the dividend yield of 5.2% is higher than many other equity income funds.

bull bear
Large liquid trust in a specialist sector, using structure's flexibility to the full Volatile NAV, likely to be impacted strongly by Chinese sentiment (for good or bad)
Dividend yield Concentrated portfolio, in a relatively narrow sector
Discount is wide in absolute and relative terms
Continue to Portfolio

Fund History

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...
14 Apr 2022 Has the commodities ship sailed?
The commodities boom may be longer-lasting than you think…
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...
29 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?...
22 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
This veteran commodities trust has sharply increased exposure to gold and is trading on a wide discount...
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…
13 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...
19 Mar 2019 Electric Dreams: The future of energy
At our first public event, three fund managers gave their insights on the future of energy and the investment opportunities in this space...
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 are on unusually wide discounts...
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
05 Apr 2018 The search for discounted yield
We scour the investment trust universe for trusts offering chunky yields on a discount...
04 Apr 2018 Electric dreams
We examine the growing shift toward electrical power across a broad range of industries, and the implications for investment trusts with exposure to them...
29 Mar 2018 Fund Analysis
2017 represented a return to outperformance for the managers, as well as marking another very strong performance in absolute terms
12 Mar 2018 Fund Analysis
2017 represented a return to outperformance for the managers of this well known commodities focused trust...
06 Jun 2017 Fund Analysis
A commodity focused investment trust that has undergone a difficult period but the managers have done much in terms of rebuilding the portfolio...
View all

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