BlackRock Gold & General fund page

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BlackRock Gold & General

IA Sector:

Specialist

Asset Manager:

BlackRock

Asset Manager Website:

www.blackrock.com

Asset Manager Factsheet:

The fund invests in gold, mining and precious metal related stocks, with the managers using a flexible approach that acknowledges the inherent volatility and cyclicality of the natural resources sector. The fund represents an effective way to gain exposure to primarily gold shares across the market-cap spectrum. It does not hold physical gold or metal. Within its sector, the fund features in the 'Equities, All-Cap, Gold & Precious Metals' category.

Opinion, Characteristics & Utility

Opinion

This Recommended fund is the oldest specialist UK unit trust.
The fund management team is one of the largest and longest established in the natural resources arena. Evy Hambro is a veteran gold investor.
The managers use a rigorous and data-rich investment process that benefits from the expertise of the group’s Natural Resources team.

Characteristics & Utility

The fund is an effective way to gain exposure to primarily gold shares. Gold-related investments can be used in portfolios as a risk offset, or as an inflation hedge.
Gold shares are inherently volatile and any investment must be made on the basis that significant drawdowns have and are likely to be a feature of performance in the future.
Gold share prices typically respond to changes in the gold price but investors should be aware that there are also periods when they are not closely correlated.
The benchmark, the FTSE Gold Mines index, has become increasingly concentrated, with some of largest constituents accounting for over 10% each. Due to UCITS rule which limits individual fund positions to 10%, the fund has structural underweights to the largest index holdings. Equally, this means that the fund’s largest exposures are more diversified than the index.

Risk Commentary

The fund's KIID Synthetic Risk and Reward Indicator (SRRI) is 7. This is a regulatory measurement that is, where possible, calculated from the volatility of its weekly performance over a five-year period. A score of 7 means the fund's historic volatility is greater than 25%.

The fund's risk score fully reflects the volatile nature of investing in gold shares. They are inherently volatile as they are highly correlated with the underlying price of gold. We would also draw clients' attention to the potential drawdowns that have traditionally been associated with investing in gold shares where losses have exceeded 50% in past peak to trough declines. Different share classes could have differing SRRI scores.

Description

Investment Team

Evy Hambro joined the firm as part of Mercury Asset Management in 1994. He is the Global Head of Thematic and Sector investing for BlackRock and is responsible for the management of the BGF World Mining, BGF World Gold, BlackRock Gold & General funds and the BlackRock World Mining Trust. He works closely with Tom Holl, who joined BlackRock in 2006 and was appointed co-manager on the fund in July 2015. They are supported by the broader Natural Resources team.

Investment Philosophy

The Natural Resources team seeks investments in gold companies that offer the best exposure to gold prices with an acceptable level of risk. They favour companies with growth potential, where the management has a strong track record and production costs are relatively low.

Portfolio Construction & Risk Controls

The portfolio typically features 50-80 stocks, the majority of which are established gold producers. Country weights are primarily a residual of stock selection. The aim is to achieve balanced portfolio with global exposure, built with an awareness of gold price sensitivity, robustness, and liquidity. Portfolio turnover is typically low and there are no specific limits on geography, stock and sector outside of the normal regulatory requirements.

Investment Process

The process has a long heritage and involves both top-down and bottom-up investment disciplines. Initially, the team follows approximately 300 stocks, narrowed down to 150 stocks which are analysed more closely. The investment universe is screened on valuation, performance and ESG metrics. They undertake analysis on supply and demand and market sentiment, together with political and regulatory monitoring to forecast directional trends in each commodity price. The team members also draw upon their proprietary ESG industry matrix, which is designed to provide a framework by which they can identify the key long-term issues impacting industries.

Using the output of this work, the team looks for companies that exhibit some, or all, of the following characteristics: superior asset quality (high margins and barriers to entry); management with a proven track record of delivering value to shareholders; sound capital structures (strong financials and debt coverage); good capital allocation (sensible approach to the allocation of capital between investment and dividends); robust management of ESG factors. As part of the company analysis, the team completes a proprietary research template. This allows for comparison across sub-sectors and facilitates team debate. The process also incorporates site visits and management meetings. They look at different valuation metrics depending on the nature of the sub-sector and the stage of the company’s development. These include DCF analysis, free cashflow yield, P/E, price/book and price/NAV.

Key Fund Facts

Inception Date:

07 April 1988

Manager(s) (Since):

Evy Hambro (Apr 09)

Tom Holl (July 15)

Fund Domicile:

United Kingdom

Base Currency:

£ Sterling

Fund Benchmark:

FTSE Gold Mines

IA Sector:

Specialist

Formal documentation, including the fund prospectus and the KIID, should be sought directly from the asset manager. For ease of reference, a link to the ASSET MANAGER WEBSITE can be found above, as well as a link to the ASSET MANAGER FACTSHEET.