Ninety One Global Gold
This is a concentrated fund investing in gold mining companies. It has an excellent track record and has been managed by George Cheveley, a highly experienced commodities expert, since 2015. It was previously known as Investec Global Gold before Ninety One demerged from Investec in March 2020.
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George is a portfolio manager and metals and mining specialist in the Thematic Equity team at Ninety One. He has been with the firm since 2007 and manages the Global Gold Fund while co-managing the diversified Natural Resources strategies. George focuses on metals and mining supply and demand, including the effects of renewable energy and electric vehicles on metal requirements. Prior to joining Ninety One, he worked as a market analyst at BHP Billiton and spent three years at CRU, specializing in commodities research. George started his career at British Steel Strip Products. He holds an honours degree in Classics from Oxford University and an MBA from Warwick University.
George is a portfolio manager and metals and mining specialist in the Thematic Equity team at Ninety One. He has been with the firm since 2007 and manages the Global Gold Fund while co-managing the diversified Natural Resources strategies. George focuses on metals and mining supply and demand, including the effects of renewable energy and electric vehicles on metal requirements. Prior to joining Ninety One, he worked as a market analyst at BHP Billiton and spent three years at CRU, specializing in commodities research. George started his career at British Steel Strip Products. He holds an honours degree in Classics from Oxford University and an MBA from Warwick University.
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Company Description
Ninety One is an independent, active global asset manager, managing more than £123.1 billion* on behalf of clients. Established in South Africa in 1991, as Investec Asset Management, the firm started offering domestic investments in an emerging market. In 2020, almost three decades of organic growth later, the firm de-merged from Investec Group and became Ninety One. Today, the firm offers active strategies across equities, fixed income, multi-asset, alternatives and sustainability to institutions, advisors and individual investors around the world.*as at 30.09.23
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Quote from the Fund Manager
The only thing we can be certain about is that the outlook is uncertain, and therefore we believe an allocation to the Ninety One Global Gold fund, with its 30-year track record - and manager experience to match - can act as a store of value in client portfolios over the long term.
George Chevely
Lead Manager
Investment process
Ninety One Global Gold fund’s philosophy is that investing in gold equities is better than investing in gold itself. The manager believes that gold equities offer leverage to the gold price - so if you believe in gold, you are better off owning gold equities. In addition, unlike physical gold, many gold miners pay a dividend and these pay-outs have been rising in recent years. The gold mining sector has also seen a lot of consolidation and greater capital discipline, which is helping to drive free cash flow generation.
The fund targets miners which can generate superior return on capital through the commodity cycle. The process begins with a fundamental analysis of the underlying commodity. The fund also has the ability to invest around one third of the portfolio in non-gold metals such as platinum, palladium, nickel or silver.
This is a core gold fund which manages risk relative to a benchmark. Very large gold miners, like Newmont and Barrick, are always likely to feature in the portfolio, even if they are underweight positions, but the manager still has considerable freedom to avoid weaker miners and take large active positions.
The fund is actually very concentrated, currently with around 25 holdings. The fund’s entire universe is only about 100 stocks, with most miners failing to beat the fund’s quality requirements in terms of return on equity and free cash flow generation.
The process begins with a commodity scorecard, on which commodities are scored on six fundamental elements including supply and demand fundamentals.
Stock ideas are then generated through a company screen, looking for those businesses earning a high return on capital with strong cash generation trading on a reasonable valuation. Once an idea is identified, the team will undertake a full income statement, cashflow statement and balance sheet analysis.
Risk
The Ninety One Global Gold fund is highly concentrated with around 25 holdings. Around two thirds of the fund is typically invested in large-caps, with most of the rest of the portfolio in mid-caps and only a small amount in small-caps. The fund is of course a very volatile strategy given the nature and specialism of the asset class.
ESG
ESG - Integrated
The gold industry by nature is environmentally intensive and therefore is considered an ESG laggard. However, this does not mean George ignores all ESG inputs when compiling his portfolio. He still considers factors that a firm can control when analysing stocks and will incorporate this into his process. This means that while the fund may have a lower absolute ESG profile, it is better than many of its peers. The ESG integration starts with creating a quantitative score. The team will take external data and weigh it with its own proprietary model. It uses its expertise to evaluate what is material across three areas: natural capital (environmental impact), human social capital (the impact on people) and financial capital. These scores are used to influence the valuation models and position sizes for each stock.
Those that have the worst environmental or human rights issues are scored very lowly, meaning they are unlikely to feature heavily in the portfolio, and those that are focusing on addressing issues are scored better. Furthermore, the team will also engage with firms to encourage them to operate in a way that is better for all stakeholders, including a focus on factors such as the energy and emissions used in production and throughout the supply chain.
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