Over the last three years alone the fund has shed 57.54 per cent, falling more than 40 percentage points further than the gold spot price, which is down 12.05 per cent.
Performance of fund vs gold spot over 3yrs
Source: FE Analytics
Gold is currently trading at $1,253 per troy ounce, down more than 28 per cent over the last year.
However, BlackRock Gold & General has an impressive long-term track record and benefits from the experience of FE Alpha Manager Evy Hambro, so investors with a long-term time horizon may be reluctant to let the fund go in spite of recent losses.
In addition, some analysts suggest it is time to buy back into the sector.
The Investment Quorum’s Lee Robertson (pictured) says that while he has reduced his exposure to commodities over the past year, the prolonged period of underperformance in the sector is causing him to revisit it. "We’re beginning to quietly look at commodities again," he said.
Cazenove multi-managers Robin McDonald and Marcus Brookes told FE Trustnet earlier this year that they were picking up a holding in the BlackRock fund because valuations were just too cheap to ignore.
BlackRock Gold & General is one of the funds the Investment Quorum is using to gain commodity exposure in its model portfolios, but Robertson says the fund is purely a long-only play and has a fairly narrow investment universe, focusing on gold mining stocks.
He says the £154.5m Investec Enhanced Natural Resources fund, run by FE Alpha Manager Bradley George and George Cheveley, is the perfect fund to complement BlackRock Gold & General for investors who are dipping their toes back into commodities.
Robertson says the fact that the fund uses a long/short strategy means that it should be able to provide more stability in various market conditions and will mitigate some of the risks of the notoriously volatile mining sector.
"Investec, like all commodities funds, has had a choppy ride over the short-term, but we think it will stand up over the long-term," he said.
Robertson adds that the fund should be able to perform well in different market conditions. It has a broader investment universe than the Gold & General fund, which is why they should work well together.
PSigma’s Tom Becket also told FE Trustnet he is using the fund to play the commodities revival.
Investec Enhanced Natural Resources has made 51.51 per cent over the past five years, compared with just 5.49 per cent from its BlackRock rival. It has also beaten it over one and three years.
Since launch in May 2008, the Investec fund has beaten its benchmark, a 50/50 split between the MSCI ACWI Materials and MSCI ACWI Energy indices, which gained 6.31 per cent over the period.
Performance of funds vs benchmark since launch
Source: FE Analytics
As Robertson highlighted, the fund’s long/short strategy has given it a layer of stability over the medium-term.
Over the past five years, the fund has been significantly less volatile than both the BlackRock portfolio and its combination benchmark, with an annualised score of just 13.98 per cent.
The Investec fund was even less volatile than the FTSE All Share, which has an annualised score of 14.47 per cent over the last five years.
The BlackRock Gold & General fund was more than twice as volatile, scoring 31.8 per cent.
George and Cheveley’s fund is invested in some of the largest mining corporations in the world, including Marathon Oil, Royal Dutch Shell and Glencore Xstrata. Australia-based miner BHP Billiton is the largest holding in the portfolio.
The largest sector exposure within the commodities space is in basic materials, followed by equal weightings in oil and gas and industrials.
The BlackRock portfolio, on the other hand, has holdings in major international gold miners such as Fresnillo, Goldcorp, Newcrest Mining and Randgold Resources.
More than 95 per cent of the fund is invested in precious metals and stones, which has crippled performance of late and is one of the reasons why Robertson prefers the broad-brush approach taken by the Investec team.
The Investec fund requires a minimum investment of £1,000 and has ongoing charges of 1.68 per cent. BlackRock Gold & General requires a minimum investment of £500 and has ongoing charges of 1.93 per cent.
