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- Blackrock World Mining Trust - Downgraded
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RobecoSAM Smart Materials Fund - New rating
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Blackrock World Mining Trust - Downgraded
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P2P Global Investments C-share issue
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Murray International - Downgraded
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TM Sanditon European fund - New rating
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UK Commercial Property Trust - Rating suspended
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BlueCrest BlueTrend (BBTS) - Downgraded
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Blackrock World Mining Trust - Downgraded
Since 2011 Blackrock World Mining Trust (BRWM) has emphasised yield as a way of limiting the trust’s discount to net asset value (NAV).
In order to boost income, it has developed three unconventional revenue streams, to complement the dividends from the underlying equity portfolio: direct investment in mining royalty contracts, a portfolio of high yield bonds and a policy of writing options to harvest the premium.
Since then, NAV performance has been generally disappointing, although it has, to a degree, been offset by a narrowing of the discount to the NAV on which the shares trade.
The recent setback in commodity prices is placing extra pressure upon the mining sector, which had been collectively hoping for an improvement in its fortunes in the second half of the year.
This situation highlights the prospect that BRWM’s historic dividend which is likely to be uncovered this year and beyond. In its recent interim results statement BRWM acknowledged the dilemma it faces in this respect: “the Company is prepared to use revenue reserves to maintain the current dividend level in 2015. Future use of reserves will depend on the Board’s confidence in returning to a fully covered position in the near term”. Recent events also draw attention to the high underlying capital risk profile implied by the exposure implicit in BRWM’s three unconventional income sources. This combination of factors and the current modest discount to NAV, suggests that the shares are increasingly vulnerable to a potential derating, via a widening of the discount.
Holders may therefore consider reviewing the merits of retaining the shares.
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This article does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers. Different funds carry varying levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of these specific risks prior to investing.