What is the fund objective?

The World Gold Fund seeks to maximise total return by investing globally, at least 70% of its total assets in the equity securities of companies whose predominant economic activity is gold-mining.

It may also invest in the equity securities of companies whose predominant economic activity is other precious metal or mineral and base metal or mineral mining but the fund does not hold physical gold or metal.

For more information please see the prospectus.

What is the fund’s investment approach?

The process involves an assessment of both companies and commodities. Rather than forecast commodity prices, the team predicts their directional trend and the drivers of the trend.

Supply is easier to predict, given the length of time it takes to discover and build mines. The demand side is more subjective and they acknowledge that the impact of investment demand over the last few years can’t be underestimated. Many investors have flocked to the perceived safety of gold as an inflation hedge and in an attempt to protect capital.

Company analysis is critical and the team sees more than 1,000 companies annually. For companies producing a single metal, the team creates a discontinued cash-flow model to compare the valuation with the current market value. And, for diversified producers they look at the long-term earnings outlook. They also believe good management is key to a business’s success and a top-down overlay incorporates factors such as political risk into their analysis.

The fund comprises three segments:

• Large positions, typically 5%-10%, where liquidity is good and there is longevity of coverage
• Medium positions, 2%-5%, usually a single metal producer or activity in one country only
• Positions below 2%, which could be small-cap stocks or those with poor liquidity

Who is the Fund Manager?

Graham Birch decided not to return from his 12-month sabbatical so this fund is now managed by Evy Hambro and Robin Batchelor.

Evy Hambro formally appointed co-manager alongside Graham at the start of 2002. Hambro’s entire career has been focused on the analysis of precious metals and mining and he helped Birch to build the team into the cohesive unit they have today. He brings an outstanding pedigree in his field and his entire career has been focused on the analysis of precision metals and mining.

Evy has run the 14-strong Natural Resources Team at BlackRock alongside Robin Batchelor since 2009. Evy is responsible for the mining expertise, made up of four analysts, and Robin Batchelor is in charge of the energy side of the house which includes four energy analysts and another two who specialise in agriculture.