International Gold
International Gold Fund Update
September Quarter 2008
This update is for the BlackRock International Gold Fund (formerly known as the Merrill Lynch International Gold Fund).
The performance shown in the Fund Update is the gross performance of the fund. To view the net performance of the fund or of the different unit classes of the fund download the Fund Performance Report or visit Fund Performance.
Gross performance returns and benchmark performance shown do not include expenses, fees or tax. Net performance returns are prepared on an exit-to-exit fee basis which includes all ongoing fees and expenses.
- This led to some doubts about the continued value of gold as a financial hedge in some quarters after the strong rise it had experienced in recent years and some predictions that the worst was over for markets.
- Towards the end of September gold prices rallied strongly as the global credit crisis took a sudden turn for the worse. After bottoming at around $746 on the 11th of September the gold price suddenly surged back over US$900 within days before settling at US$870 by the end of the month.
- A depreciating Australian dollar augmented the gold rally for Australian investors, with gold bullion rising almost 14% over the quarter in AUD.
- Gold equities significantly underperformed the metal over the period resulting in gold equities trading at some of the steepest discounts compared to the price of bullion in recent memory.
Fund Outlook
- Long-term fundamentals remain tight, with little sign of any oncoming supply glut. Indeed, one of the world’s largest gold companies is currently estimating that given their analysis, global production will fall by 10–15% over the next five years. This is partly due to the lack of exploration success in the gold mining industry
- On the demand side, the rising wealth of emerging economies is likely to support jewellery demand whilst the ongoing financial turmoil and inflationary pressures are likely to continue to stimulate investment demand. At the moment, however, equity valuations are discounting a bleak scenario going forward, that may present a good buying opportunity.
Performance summary
- Over the quarter the Fund returned -19.54% (before fees). For the same period the Fund’s reference benchmark, the FTSE Gold Mines Index, returned -10.93%. Please note benchmark returns are provided for reference purposes only. The portfolio construction process does not take into account the composition of the benchmark.
- The Fund has a well diversified exposure to around 40 small and mid capitalisation mining companies in total, in addition to a core holding of around 10 large cap names.
- Whilst the smaller and mid size companies continue to represent good long term value and offer leverage to the gold price, in the September quarter many have underperformed the FTSE Gold Mines Index, which is comprised entirely of large cap gold miners.
|
|
Gross returns
|
Benchmark returns^
|
Out-performance*
|
3 Month
|
-19.54%
|
-10.93%
|
-8.61%
|
6 Month
|
-28.35%
|
-11.33%
|
-17.02%
|
1 Year
|
-28.20%
|
-8.19%
|
-20.01%
|
2 Year (pa)
|
-6.93%
|
-0.61%
|
-6.32%
|
3 Year (pa)
|
5.74%
|
4.78%
|
0.96%
|
Past performance is no indication of future performance.
The performance figures assume the reinvestment of all income and are calculated gross of fees and charges.
*Shows the difference between gross return and benchmark return, and should be considered relative to the target return of the Fund.
^FTSE Goldmines Index (Capital only unhedged in AUD).
International Gold Fund Portfolio as at 30/9/2008*
Barrick Gold Corp
|
United States
|
|
Lihir Gold
|
Australia
|
Newcrest Mining
|
Australia
|
Goldcorp
|
Canada
|
Newmont Mining
|
United States
|
Randgold Resources
|
United States
|
Alamos Gold Inc
|
Canada
|
Fresnillo
|
Mexico
|
Kinross Gold Inc
|
Canada
|
Minefinders Corp
|
Canada
|
Investment objective
The Fund seeks to maximise capital growth over the medium to long-term by investing primarily in gold mining shares through out the world, including Australia.
Fund strategy
The Fund seeks investments primarily in gold companies that the Manager considers to offer the best long-term exposure to gold prices within an acceptable risk level. The Fund aims to invest in companies with strong management track records and with growth potential, both through existing operations and via the construction of new mines. Pure exploration companies would typically comprise only a small part of the portfolio.
Investment will be primarily in gold mining companies in countries including South Africa, Australia, Canada, USA and other mining companies.
Designed for investors who…
- Seek a fund that invests in gold mining shares throughout the world as well as other precious metal, base metals and mining related shares.
- Have a long term investment horizon.
|
