James Carthew: Baker Steel is 2026’s unexpected winner
The concentrated mining fund outperformed all other trusts in the first half of the year with a 65% share price return.
The AI theme dominated among the best-performing investment trusts over the first half of the year. There were the obvious tech names driving returns such as Polar Capital Technology (PCT), as well as a number of Asian and emerging markets trusts that benefitted from chipmakers’ soaring share prices.
The likes of Pacific Horizon (PHI), JPMorgan Asia Growth & Income (JAGI), Fidelity Emerging Markets (FEML), and Templeton Emerging Markets (TEM) soared with share price returns of more than 40%.
Top of the pile, however, was Baker Steel Resources (BSRT) with a sizable 65% gain in the first half of the year. It is a trust I have held in the past but not since 2018.
Despite these gains, Baker Steel is trading on a 32% discount which the board has attempted to address with a new capital allocation policy. It includes an enhanced dividend at 3% of NAV, buybacks of at least 2% of net asset value (NAV) each year, and a commitment to use half of realised profits to return of capital when the trust is trading above a 25% discount.
Listed stocks make up almost half of the portfolio, the largest of which – Tungsten West at 22% of assets – saw its share price tripled year-to-date. It is seeking to reopen a tungsten mine in South Devon and has the financing in place, following an oversubscribed share issue in February that Baker Steel backed.
The tungsten price has risen after China stopped exports, which is boosting the likely profitability of the project. An announcement on 8 July confirmed that the project is proceeding according to plan, with the aim of being fully up and running next year.
Baker Steel’s two largest unlisted investments are… read more here