The £6.3bn GF World Gold fund and £1bn Gold and General have been downgraded to silver from gold by the ratings agency.
Morningstar research analyst Fatima Khizou said Hambro is one of the longest-tenured managers in its Equity Precious Metal sector.
Khizou said: “He has consistently applied a disciplined and controlled approach through time that has proven successful in tough periods for gold but added little value in more positive environments.
“While we continue to have high regard for lead manager Hambro and the overall supporting cast, we believe that the lower-beta approach and a policy of only making incremental change, a feature of the fund, constitute a hindrance in strong rising market conditions. These factors, coupled with high fees, have lowered our overall conviction in this fund.”
Both funds have annual management charges (AMCs) of 1%. The ongoing charges figure for the GF World Mining Sicav is 1.32% while for the Gold & General unit trust it is 1.17%.
Speaking on the UK-domiciled Gold & General fund, Architas investment director Adrian Lowcock said charges are high compared to other equity funds, but are competitive when compared to its peers in the gold equity space.
The fund, which has been co-managed by Tom Holl since 2015, has only just outperformed the FTSE Gold Mining index over five years, returning 2.98% compared to 1.44% in the benchmark.
Blackrock GF World Mining and Gold & General performance
| 6m | 1yr | 3yr | 5yr | |
| BlackRock GF World Mining | 9.90 | 25.90 | 42.57 | 4.91 |
| BlackRock Gold & General | -8.03 | -13.51 | 24.87 | 2.98 |
Source: FE Analytics
Lowcock said: “Gold and indeed gold miners haven’t been in vogue for some time however, Hambro is an experienced manager with extensive support of Blackrock’s analytical team. The fund is more conservatively run so should provide better returns in falling markets but lag a strongly rising gold price as more speculative companies deliver.
“The fund has struggled with investors seeking recovery stocks over those with solid financials which are less sensitive to strongly rising prices. Hambro is more of a long term investor in gold companies so wants businesses which stick around, in the short term this can harm performance.”
In November, Fundcalibre director Clive Hale described Gold & General as the “obvious choice” for any investor looking to make a contrarian play on precious metals.
Olivia Markham is co-manager on the GF World Mining fund.
Blackrock said the downgrades were disappointing.
A spokesperson said: “Whilst the funds remain ahead of their benchmark over five, 10 and 20 years to end April 2018, they are now behind on a three-year view.
“As always, we are working hard on generating consistent alpha for our clients, which we hope will see the funds upgraded back to gold.”
