As a mirror fund, this is a Friends Provident International fund that invests exclusively in the BlackRock Merrill Lynch World Mining fund except for a small amount held in cash. This means the price of the Friends Provident International fund will be different from the underlying fund but its performance will move in line with it.
The underlying fund was established in 1997 to invest on a global basis in the stocks of mining and metals companies. The main focus is on companies that are involved in the production of base metals and industrial minerals such as iron ore and coal. The fund can also invest in companies involved in the production of gold and other precious metals but does not physically hold gold or metal.
Examples of holdings are Rio Tinto, a multi-national company that finds, mines and processes the earth’s mineral resources, and Xstrata, a global mining group listed on the London and Swiss stock exchanges.
The underlying fund is benchmarked against the HSBC Global Mining index and has been managed since launch by Evy Hambro. Hambro began his investment career in 1994 at SG Warburg. He joined Mercury Asset Management – a subsidiary of SG Warburg and the investment team was later acquired by Merrill Lynch, recently renamed BlackRock Merrill Lynch.
Hambro manages the MLIIF World Gold Fund and several segregated natural resource mandates. He also co-manages the ML natural resources hedge fund.
Introducing this fund widens the investment choice available to Friends Provident International’s investors but the sector in which it invests can be volatile due to its cyclical nature. Mining and metals stocks have experienced corrections over the last three years. Some commentators see this is evidence of a bubble bursting, but others say the long-term outlook remains positive and that short-term blips are to be expected because markets do not go up in a straight line.