JPMorgan Natural Resources -48% down but still hanging on

Linton

jabbahut40 wrote: »

A few months on and a little better. Now -43% down but still hanging onto this one with the hope of an upturn. Anyone else in the same position?


Jabba

I originally bought at £1.577 in 2003, it is now over £6. Investing in general and this fund in particular is for the long long term. It's highly volatile but with population continuing to grow faster than resource availability, I am more than happy to carry on for another 10+ years.

badger09

Linton wrote: »

I originally bought at £1.577 in 2003, it is now over £6. Investing in general and this fund in particular is for the long long term. It's highly volatile but with population continuing to grow faster than resource availability, I am more than happy to carry on for another 10+ years.

Could I ask if you're still buying at £6.22? Or if you weren't already invested, would you start now at that price?

I'm considering this as a little add on to my VLS 100%

Linton

badger09 wrote: »

Could I ask if you're still buying at £6.22? Or if you weren't already invested, would you start now at that price?

I'm considering this as a little add on to my VLS 100%

With shares one could make a reasoned judgement as to whether any particular share was under or overvalued on the basis of fundamentals - eg P/E, ROI etc etc. This cant be done with funds like JPM Nat Res. One must assume that the collective wisdom of the markets is correct, and the price it is at is as good an estimate of the true value (if such a thing exists) as is possible.

So I have two things to decide...

1) Is the sector a good one for very long term investing - do I believe Nat Res will increase in price in the long term? I would have thought on the basis of population and global standard of living increases that it's a good bet. The fund has shown that its certainly capable of very large increases in value which makes it more desirable to me. One long term winner can pay for several long term losers.

2) What % do I want in my portfolio. It's a volatile area, so I dont want too much, but I need enough to make a difference. So perhaps 5%-10%.

If I havent got the desired % in my portfolio I buy otherwise I dont.

badger09

Thank you Linton

That sounds eminently sensible.

MRMX9

I have some ISA investments invested in gold/precious metal mining company funds (e.g. Blackrock gold and general).

My experience is that when the stock market rises these fall – and vice versa. It doesn’t always correlate but they have generally done very poorly the last year to 18 months as stocks have soared.

So if you expect a stock market crash you might find that funds like this actually trend the opposite way or don’t see such sharp falls. As part of a varied portfolio they might well provide a hedge against future falls - which will surely happen some time!

TCA

TCA wrote: »

I'm currently looking at BlackRock Commodities Income Investment Trust Plc (BRCI) and BlackRock World Mining Trust (BRWM).

The more established BRWM is about 8 times the size of BRCI and currently on a discount of about 8%. BRWM's yield is 4.67% compared to 5.67% for BRCI. There is a fair crossover in holdings like Rio Tinto and BHP Billiton and these are more concentrated in BWRM, which is 100% materials based. BRCI tends towards energy (60%), so we see US holdings in Exxon and Chevron and the likes.

I bought BRWM in the end and it's proving to be pretty volatile as expected. From being 10% up at one point, it's now 8% down. But I'm comfortable with that and the dividends soften the blow.

In fact I'm tempted now to top-up my exposure in this sector as share prices of both BRWM and BRCI are close to levels not seen since 2009. Ignoring the fact that it's on a premium, anybody got a view on BRCI with its energy focus, current plunging oil prices and the strong dollar?

Doshwaster

I'm still hanging it with Blackrock Gold & General. It was doing OK so far this year but has fallen back again in the last 3 months.

TCA

TCA wrote: »

I bought BRWM in the end and it's proving to be pretty volatile as expected. From being 10% up at one point, it's now 8% down. But I'm comfortable with that and the dividends soften the blow.

Spoke too soon. BRWM is taking a big hit today. Down a further 5.5% today, at 391.5p as I type:

http://citywire.co.uk/wealth-manager/news/blackrock-world-mining-takes-7-7-nav-hit-on-failed-mine/a776974

BlackRock World Mining has written down the value of its holding in London Mining’s Marampa mine to zero at a 7.7% cost to the £834 million trust’s net asset value (NAV).

London Mining said it believes there is ‘little or no value in the equity of the company’ with iron ore prices at a five-year low putting the financing of its Sierra Leone-based operations under great strain. The ebola outbreak is also putting a strain on logistics in the country.

London Mining is seeking a partner to inject capital into the business but its share price slumped by 77.42% yesterday on the announcement.

BlackRock World Mining co-managers Evy Hambro (pictured) and Catherine Raw have subsequently written down the holding to zero. They paid £68.4 million for a revenue-related royalty from the Marampa mine back in July 2012. In its previous portfolio update, the royalty contract had been valued at £47.8 million and a holding in London Mining convertibles at £4.6 million.

This preceded a change in the trust’s mandate which granted it the ability to invest up to 20% of its assets in mining royalties and other unquoted investments. The aim was to achieve a steady income stream from the mines, effectively gaining pure exposure to the underlying commodity price while shielding the trust from mining cost inflation.

Analysis from Numis shows that at the end of June 8.2% of the trust was invested in royalties, with 6.5% of the portfolio in Marampa, making it the sixth largest holding. The trust also had 1.7% in gold-linked preference shares from Banro Corporation and in July, invested $12 million in a royalty arrangement with Avanco Resources’ Brazilian operation.

BlackRock World Mining’s shares were down 4.18%, or 17.33p, to 397.07p in mid-morning trading. It is currently on a 1% discount to NAV.

Seabee42

Resources generally rather than specifically had a very very good run and during that time an awful lot of investment was made to bring new supplies online after all look at the price they were getting. Not surprisingly this along with a flatter demand had caused prices to drop. Unless there is more agitation of supply it is hard to see any short term increases what would cause it?

I think resources are a great long term bet since we keep over consuming but I am not convinced in the short term.

Good luck!:)

bowlhead99

There are a whole bunch of factors why resources/ commodities plays may be a great long term bet, with the main one of them being that population grows while the supply of resources themselves (or capacity to grow /discover/ extract them) is relatively static. When the prices of a lot of other things are up, always good to look at things that are down.

Of course, just because something has gone up in value massively for a while and then fallen by half over a period doesn't mean anyone should expect it to double and go back to its peaks imminently. There are a variety of fundamental reasons why prices are lower which won't reverse overnight - for example U.S. adoption of, and investment in, fracking - leading to a surge in energy supply with associated price hits; increased U.S. domestic oil production; Chinese growth rate lowered significantly together with change in GDP mix from commodity-intensive towards consumer spending.

A few of those points I borrowed from this week's Deloitte Monday Briefing - which I recommend, their chief economist usually has something interesting to say in his mini-features to accompany some of the business and finance headlines of the past week, which they fire out by email.
http://blogs.deloitte.co.uk/mondaybriefing/2014/10/deloitte-monday-briefing-whatever-happened-to-the-commodity-super-cycle.html