BlackRock’s Evy Hambro has insisted investors are “not unhappy” with the performance of his £1bn Gold & General fund – even though it lost half their money last year.
The manager said he was “extremely unhappy” about the losses, but said investors expected the fund to lose out when gold was falling.
The fund’s assets under management have plunged from £3.4bn at the start of 2011 to roughly £980m today, but Mr Hambro said that this was mainly down to performance rather than investors pulling their cash out.
“Investors are very aware that we are going to perform in the direction of the gold price, but they expect us to outperform our benchmark,” he said.
BlackRock Gold & General buys equities related to the production of gold and other precious metals.
Any changes in the price of the underlying precious metals tend to be ramped up in the equity prices and it is this effect that has caused most gold equity funds to plummet lately.
The BlackRock fund extended its multi-year losing streak by shedding 47.9 per cent in 2013, taking its three-year cumulative return to a loss of 62.4 per cent by the end of last year, according to FE data.
The 2013 return was slightly better than the 53.2 per cent loss on the fund’s benchmark FTSE Gold Mines index.
Mr Hambro insisted that investors want the fund to be run on a “true to label” basis, to remain invested in gold equities rather than hiding in cash or buying unrelated assets to avoid the market falls.
He encouraged investors to top up their exposures to gold and gold shares to their pre-slump levels, but stopped short of calling the current prices a clear buying opportunity.
The price of gold has collapsed in recent years from a high of nearly $1,900 per ounce in August 2011 down to nearly $1,200 now, but Mr Hambro said the potential downside to the price was now limited.
