BGF World Gold D2 |
Morningstar's Take
|01/05/2024by Ramanand Kothari
| BlackRock Gold and General/BGF World Gold benefit from a seasoned and stable investment team that employs a sensible, benchmark-aware process in a highly concentrated universe. The Strategy’s People and Process pillars earn Above Average and Average ratings, respectively. Evy Hambro, head of thematic and sector Investing, and Tom Holl jointly manage this strategy, with Holl taking on the day-to-day management responsibilities. Holl has worked alongside Hambro on metals and mining since 2008 and became a comanager in 2015. Additionally, he comanages BGF Natural Resources Growth & Income and is the sole manager of the group’s nutrition mandates. That said, most of his time continues to be spent on the mining side. Hambro has been actively involved in this strategy since 2002 when he was appointed comanager alongside Graham Birch. After Birch's retirement in 2009, Hambro became lead manager. His long tenure and deep experience have provided investors with a substantial degree of continuity over the years. Hambro was also appointed CIO of the natural resources team (renamed the thematic and sector team) in 2009, overseeing a sizable group managing energy, mining, and gold mandates, as well as (since 2019) thematic strategies. The managers are well-supported by a 15-member team, dedicated to covering the wider natural resources sectors with lower staff turnover. The managers have consistently implemented a well-structured approach over market cycles. The primary emphasis is on higher-quality producers, where the team thinks valuations underestimate the longer-term earnings prospects. However, in recent years, the prospectus and Morningstar Category indexes have become more concentrated such that UCITS regulations limit individual positions to 10%. This means the portfolio is significantly structurally underweight in the three largest firms in the investment universe, Newmont (23.9%), Barrick Gold (16.9%), and Agnico (15.8%), which together make up nearly 57% of the FTSE Gold Mines Index. Consequently, the performance of these names can determine the strategy's relative return. In addition, the strategy's substantial assets under management (USD 6.0 billion) somewhat restrict the smaller-cap opportunity set from a liquidity standpoint. Nevertheless, it's a sensible, well-structured process for a highly condensed space. Since Hambro took over from May 2009 to March 2024, the fund’s returns are slightly ahead of the prospectus benchmark (FTSE Gold Mines Index), category benchmark (Morningstar Global Gold Index), and sector equity precious metal peers. Weak 2023 and 2022 results have made its near- to medium-term performance less impressive, led by a combination of macroeconomic and stock-specific disappointments. |
A diversified gold strategy in a highly concentrated universe.To find out how Morningstar rates a fund click here.
| Morningstar Pillars | |
| People | Above Average |
| Parent | Above Average |
| Process | Average |
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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