BlackRock Commodities Income , managed by Olivia Markham (pictured) with co-manager Tom Hall, has released its interim reports for the six months ended 31 May 2014. The total return on the net asset value for the period was 7.9%, whilst share the total return on the share price was 5.2%, reflecting a widening of the discount during the period. Both share price and NAV total return were ahead of the companies composite benchmark index (50% MSCI World Energy and 50% Euromoney Global Mining) which returned 4.1% during the same. The outperformance has been driven primarily by the trusts in its holdings in the energy sector, an area where BRCI has been overweight (62% of the portfolio at the end of the period).
BRCI is targeting a total dividend of at least 5.95p for the year to 30 November 2014 (up from 5.90p for 2013) and has maintained the second quarterly dividend at the 1.4875p level. Sterling strength is a headwind to the revenue account but BRCI reports it’s on track to meet the 5.95p target and its intention is to maintain the quarterly dividend at at least the 1.4875p level for the third and fourth dividends.
In terms of outlook, the manager’s believe that the downside risks in current commodity prices are now relatively low, although there remains some uncertainty surrounding economic activity in China. Nonetheless, an improving macroeconomic backdrop, particularly for developed economies, combined with compelling relative equity valuations and noticeably improved capital discipline is, in the manager’s view, driving renewed interest in the sector.