Thematic funds
We analyse the best, the newest and the biggest thematic funds.
Commentary from Ross Brookes, collectives analyst, Charles Stanley
Top ranked funds 3-year performance
FUND PICKER’S COMMENT
ROSS BROOKES,
COLLECTIVES ANALYST,
CHARLES STANLEY
Despite the resignation of
Graham Birch, Evy Hambro
and the remaining team at
BlackRock are one of best
resourced in the market.
Their World Mining Fund
is focused on high quality
businesses trading on P/E
discounts to the market.
The focus is on bulk
commodities, with a high
visibility of earnings that
are immune to speculation.
The manager will maintain
a low exposure to pure
exploration plays and will
limit the portfolio’s exposure
to producers with
complex hedging structures.
The fund is managed
using a blended approach
with no discernible style
bias and research is conducted
on a global basis
and an assessment of the
quality of a company’s ore
reserves is a key component
of the evaluation
process.
While the process
majors on valuation as the
primary consideration, a
top-down macro overlay is
used. Direct exposure to
any one mineral is unlikely
to exceed 30% and core
positions are taken on a
two to three-year view.
Whether there is a huge
amount of traction left in
the mining story short-term
remains to be seen but we
Top 10 thematic funds by 3-year performance
To 6 Jan ’10. Bid to bid, £, gross income, no cap. Source: Morningstar
believe Hambro and the
team are well placed to
deliver over the longer
term.
The Investec Global
Gold Fund has a similar
investment remit to the
BlackRock fund in that it
invests predominantly in
gold mining shares but also
has the scope to invest in
other precious metals and
mining markets. Demand
for gold remains robust as
the rising wealth of the
emerging market regions
FUND ANALYSIS
continues to drive the
demand for jewellery and,
on the supply side, production
peaked back in
2001 – therefore positive
price pressures are in place
on both supply and
demand sides of the equation.
Gold also offers a
potential hedge, given its
status as a safe haven asset
in times of financial market
uncertainty. The low correlation
to other asset classes
also offers investors good
long-term diversification
■ Smith & Williamson’s Global Gold and Resources Fund currently
has around 72% of assets in gold mining shares.
■ The remainder of the fund is largely split between diversified
metals & mining (15%) and precious metals & minerals (9%).
FUND SELECTOR THEMATIC FUNDS
3-year 3-year 3-year 3-year 3-year Morningstar Fund Domicile
% chg Alpha Beta R² mth vol Rating size ($m)
LO Funds World Gold Exp $ P A 84.5 2.05 1.02 0.2 12.87 ★★★ 87.19 Luxembourg
BlackRock Gold and General A Inc 80.2 1.89 0.83 0.17 11.24 ★★★★★ 2,132.88 UK
BGF World Gold A2 $ 77.36 1.93 0.85 0.16 12.15 ★★★★ 4,408.69 Luxembourg
Investec GSF Glbl Gold A Inc Grs $ 76.96 1.84 0.87 0.18 11.56 ★★★★ 202.01 Luxembourg
First State Global Resources A 70.74 1.49 1.07 0.4 9.52 ★★★★ 579.04 UK
Investec Global Gold A Acc Net £ 67.46 1.69 0.69 0.13 10.89 ★★★★ 73.37 UK
UTI India Pharma A 65.79 1.53 1.34 0.68 9.12 ★★★★★ N/S Mauritius
iShares DJ STOXX 600 Chem Swap (DE) 64.1 1.33 1.24 0.74 8.09 ★★★★★ 28.26 Germany
Smith & Williamson Glbl Gold & Resources 60.52 1.68 0.86 0.18 11.31 ★★★ 10.4 UK
BGF World Mining A2 $ 59.12 1.34 1.34 0.46 11.05 ★★★ 7,901.78 Luxembourg
Top 3 performing funds vs world index
80
60
40
20
%
0
-20
BGF World
Energy A2 $
MSCI World
-40
LO Funds World
-60 Gold Exp $ P A
Feb ’07 Aug Feb ’08
Source: Morningstar
Aug
BlackRock Gold
and General A
Feb ’09
benefits. However, given
the strength of the team
and the relative performance
track records we continue
to own BlackRock.
The First State Global
Resources Fund aims to
provide long-term capital
growth by investing in
global equities in the natural
resources sector and is
benchmarked against the
HSBC Global Mining Index.
Performance has been
strong since Joanne Warner
assumed responsibility for
the mandate in 2006, beating
the majority of the
onshore resource-based
funds from that point. For
a broad-based global
resources play we have
tended to use JPM Natural
Resources.
MARCH 2010 [www.portfolio-adviser.com] PORTFOLIO ADVISER
Aug
Feb ’10
Top 10 funds – 3-year risk/return
Return (%)
100
80
60
40
20
BlackRock Gold and General A Inc
iShares DJ STOXX
600 Chem Swap (DE) First State Global
Resources A
UTI India Pharma A
Investec Global
Gold A Acc Net £
BGF World Mining A2 $
LO Funds World
Gold Exp $ P A
BGF World Gold A2 $
Investec GSF Glbl
Gold A Inc Grs $
Smith & Williamson
Glbl Gold & Resources
0
Sector average
7 8 9 10 11 12 13 14
Standard deviation (%)
To 6 Jan ’10. Bid to bid, £, gross inc, no cap. Source: Morningstar
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