BlackRock World Mining (BRWM) 29 January 2025

BlackRock World Mining (BRWM) invests in a crucial sector for a number of the global economy’s most exciting growth trends. Artificial intelligence has been the driving force behind US stock markets in their recent rally, and it has increasingly become clear how materials-intensive its build-out will be. AI will require huge amounts of power and vast data centres, as well as providing further impetus behind the electrification of everything that the energy transition, another of the key secular growth trends, requires.

BRWM is managed fully flexibly by Evy Hambro and Olivia Markham, who have built a Portfolio with multiple growth drivers. Gold miners, for example, have become a very significant weight over 2024, as a high gold price and falling costs have led to a rally in the industry. Gold has been driven more by geopolitical risk and rising central bank demand. The managers have also built up a small position in uranium miners, with the possibility growing that the US will turn to nuclear to fuel AI and meet decarbonisation goals.

Key exposures remain the industrial commodities of iron ore and copper, and weakness in the Chinese economy has been weighing on demand for these – and we think also explains the wide Discount. However, even these commodities are more and more driven by secular growth themes than cyclical demand, with the energy transition ever more important to copper demand in particular.

BRWM has long offered a high yield, which is 6.8% on a historical basis at the time of writing and supported by idiosyncratic investments outside the public equity market that the end investor would struggle to replicate elsewhere. We note though, the potential for the final dividend for 2024 to be lower than 2023’s thanks to a reduction in underlying dividends due to Chinese weakness.

In the Discount section below we comment on the cyclical return pattern BRWM has demonstrated in the past. NAV performance tends to be volatile and extremely powerful in rising markets, while the share price has tended to move to a premium in such environments too. We therefore view the current wide discount of 9.4% and the current wariness around the future of commodity markets as an opportunity to accumulate a fund with the potential to deliver high long-term returns and a high yield.

We acknowledge that there are short-term concerns to be dealt with. Trump’s election in the USA has raised fears of a slowdown in the energy transition and tariffs on China, both of which could be negative for commodity demand to some extent. However, in our view demand for commodities should deliver strong growth over the medium to long term, buoyed by the energy transition and the vast investment in infrastructure required for electrification and the roll-out of artificial intelligence. We think BRWM’s diversified portfolio, which includes exposure to gold miners and uranium, as well as unquoted investments, could be an attractive component of a long-term growth or income-seeker’s portfolio.