BGF World Gold S2 |
Morningstar's Take
|10/05/2023by Ramanand Kothari
| BGF World Gold/BlackRock Gold and General benefit from a stable, knowledgeable team and a sensible, benchmark-aware process. The Morningstar Medalist Rating remains Bronze for the clean share classes, while the more-expensive ones are rated Neutral. Evy Hambro, head of Thematic & Sector Investing, and Tom Holl comanage this strategy. 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 the 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 Thematic & Sector) in 2009, with oversight of a sizable team managing energy, mining, and gold mandates, and since 2019 also thematic strategies. Comanager Holl is the day-to-day manager for this gold strategy and has worked alongside Hambro on metals and mining since 2008. He was appointed comanager here in 2015. In addition, he is a comanager of BGF Natural Resources Growth & Income and sole manager of the group’s nutrition mandates, but most of his time continues to be spent on the mining side. The managers are well-supported by the wider 15-member team, which has remained relatively stable over time, and continues to expand its analyst resources. 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 category indexes have become more concentrated, such that UCITS regulations limit individual positions to 10%, meaning the portfolio is significantly structurally underweight in the two largest firms in the investment universe, Newmont and Barrick Gold, which together make up nearly 37% of the FTSE Gold Mines Index as of April 2023. Consequently, the performance of these names can, to a certain extent, determine the strategy's relative return. In addition, the strategy's substantial assets under management (USD 6.5 billion as of March 2023) somewhat restricts the smaller-cap opportunity set from a liquidity standpoint. Nevertheless, we continue to view the strategy favorably thanks to its solid implementation by an experienced team with deep industry and company-level insight. Since Evy Hambro took over from May 2009 to April 2023, the clean share class has outperformed its FTSE Gold Mines Index prospectus benchmark and largely matched the EMIX Global Mining Global Gold Index category benchmark. In 2022, the fund struggled and meaningfully lagged its index. A combination of macroeconomic and stock-specific disappointments led to underperformance. |
A well-diversified gold strategy for a 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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