City Natural Resources High Yield Trust is one of the oldest investment trusts focused on commodities, and has comfortably outperformed its composite benchmark, as well as its peers. The benchmark is two-thirds HSBC Global Mining Index and one-third Credit Suisse High Yield Index.
The trust's investment objective is capital growth and income from mining and resource equities, and bonds issued by industrial and resources companies. It has maintained or raised dividends every year since 2004.
Most of City Natural Resources' track record is attributable to Richard Lockwood, who managed the trust up until September. He continues as a consultant. The trust's co-manager, Will Smith, continues in that role and is now assisted by Merfyn Roberts. Mr Roberts has worked at New City Investment Managers since 2006 and has over 26 years' investment experience.
The managers use a mixture of top-down and bottom-up investment strategies, firstly identifying sectors and geographical areas, although the trust is not managed with specific reference to geographical or sectoral allocation targets, or reference to its benchmark. The managers focus on fundamental analysis, meeting around 20 companies a week.
They look for companies with good management teams that are careful with shareholder capital, preferring companies that avoid equity dilution and are prepared to use debt financing as an alternative .The managers also favour companies with solid balance sheets, which offer growth potential and have a strong capacity to pay dividends.
CITY NATURAL RESOURCES HIGH YIELD TRUST (CYN) | |||
|---|---|---|---|
| PRICE: | 287p | PRICE DISCOUNT TO NAV: | 12.02% |
| MARKET CAP: | £190.54m | 1-YEAR NAV PERFORMANCE: | 49.56% |
| No OF HOLDINGS: | 219* | 3-YEAR NAV PERFORMANCE: | 66.31% |
| SET-UP DATE: | 25 June 2003 | 5-YEAR NAV PERFORMANCE: | 281.71% |
| MANAGER START DATE: | Will Smith 31/12/09 Merfyn Roberts 14/09/21010 | TOTAL EXPENSE RATIO: | 1.52% |
| NAV: | 317.74p | YIELD: | 1.32% |
| GEARING: | 107% | MORE DETAILS: | ncim.co.uk |
Source: Investors Chronicle, *New City Investment Managers & **Morningstar.
Performance data as at 24 November 2010.
Top 10 holdings as at 31 October 2010
| Holding | Percentage |
|---|---|
| Polar Star Mining | 9.3 |
| Extract Resources | 3.9 |
| Kalahari Minerals | 3.4 |
| REA Holdings | 2.9 |
| New Britain Palm Oil | 2.7 |
| Perseus Mining | 2.2 |
| Neo Material Tech | 1.5 |
| Silver Wheaton | 1.5 |
| Coalspur Mines | 1.4 |
| Sandfire Resources | 1.4 |
Asset allocation
Asset | Percentage |
|---|---|
| Gold | 29.6 |
| Copper | 11.0 |
| Corporate bonds | 10.3 |
| Uranium | 9.2 |
| Convertible bonds | 8.8 |
| Oil & gas | 8.3 |
| Rare earth | 5.9 |
| Palm oil | 5.4 |
| Silver | 5.2 |
| Iron ore | 3.0 |
| Preference shares | 2.0 |
| Platinum | 1.3 |
