Seeing the whites of the eyes of those highly paid individuals who look after your investments is a rarity. It shouldn’t be, but that’s the way the investment industry has become. Aloof.
Although it courts financial advisers, it leaves us poor souls to get all of our key investment information from online platforms such as Hargreaves Lansdown and Interactive Investor.
Arrogant? A little. Disrespectful? Yes. After all, without our hard- earned dosh to look after, these profitable investment houses wouldn’t have businesses to run. Customers should always be king.
It was therefore refreshing last Tuesday to rock up at the London offices of investment giant BlackRock, attend the annual general meeting of investment trust World Mining Trust, and listen to the views of the co-managers on the future for commodity prices.
As one of more than 100 shareholders who attended the event, it was a thought-provoking hour and a half. It was like being back in further education as Evy Hambro and Olivia Markham gave their opinions on the trust’s performance in 2022 (rather good, a 26 per cent share price return) and how it would likely fare in the near future (rather well). We eagerly absorbed what they told us, some taking notes – myself included.
Wind in the sails: The demand for metals fundamental to reaching net zero, including graphite (key in the production of solar and wind energy), will ratchet up
I came away from the meeting empowered and more in touch with an investment that has sat in my Isa wrapper quietly minding its own business (and me ignoring it). I’m sure I wasn’t alone, judging by the faces of those around me – full of concentration and all ears.
Hambro and Markham gave a compelling case for investing in commodities. In simple terms, their view is that as we move towards net zero in 2050, the demand for metals fundamental to reaching that target will ratchet up.
Everything from copper and nickel (integral to electric cars); cobalt, lithium and graphite (key in the production of solar and wind energy); through to iron ore (essential in the making of the steel needed to build ever more wind turbines).
Unfortunately, the opening of new mines in Africa and South America will be insufficient to provide enough commodity tonnage to meet this burgeoning demand. The result is that the prices of these key commodities will remain high, generating mega profits for mining companies. Investors in these businesses, the likes of World Mining Trust, will benefit handsomely from a stream of dividends which they can pass on to shareholders.
In the last financial year, the trust paid dividends of 40 pence. With the shares currently trading at around £6.90, that is an attractive level of income, equivalent to a dividend yield of just below 5.8 per cent.
Most mining companies, say Hambro and Markham, are devoid of major debt, their balance sheets are robust, while from a market valuation point of view their shares look cheap. At some stage, maybe as some of these mining companies start decarbonising their own production processes – ‘brown2green’ – their shares will be re-rated upwards.
From an investor point of view, the case for commodities is strong. A number of investment houses apart from BlackRock – such as Barings and JP Morgan – provide funds that will give you exposure.
Yet, this is not a one-way ticket. As investors we may rejoice, but as consumers with household budgets to keep on top of, higher commodity prices will compromise our spending power – as the things we are told we need to adhere to a new green society become ever more expensive.
We must also not discard the threat of commodities becoming geopolitical ‘weapons’ as the likes of China seek to grasp control of them, holding the rest of the world to ransom.
Hambro and Markham were well worth the rather scary bicycle ride across London to hear them speak. Other investment trusts also offer up their investment managers to shareholders at AGMs. So, if you get invited to attend, give them a go. If my experience is anything to go by, it might get your investment juices flowing.
…and inviting small investors is key
One final point on AGMs. Hats off to BlackRock as managers of World Mining Trust for writing to ‘nominee’ shareholders such as myself, inviting us to attend last Tuesday’s meeting.
It is the first time the investment giant has done this, using shareholder information supplied by Hargreaves Lansdown which holds its customers’ investments in nominee accounts.
The result was a higher than usual shareholder turn-out and remarks from at least three attendees (myself included), complimenting the trust’s board on embracing ‘small’ investors.
Such boldness should be the norm, not the exception – and I trust other investment trusts (and listed companies) will follow BlackRock’s lead. My suggestion that the AGM should have been screened live to shareholders who could not attend in person got no more than a lukewarm reception from trust chairman David Cheyne. But its time will come.
Stock market-listed investment companies need to make investors feel wanted. It’s why a ‘Share Your Voice’ campaign headed by Marks & Spencer chairman Archie Norman is gaining momentum.
Share Your Voice, backed by UK Shareholders’ Association, ShareSoc and Quoted Companies Alliance, is calling for changes to company law that would help reconnect shareholders to the companies they invest in. It is a splendid campaign that all investors in the UK stock market should support. You can sign the petition at petition.parliament.uk/petitions/636051.
Lord Holmes’ voice must be heard on banking hubs
Lord Holmes of Richmond, a Conservative Peer, is a remarkable individual. As a Paralympic swimmer, he won nine gold medals for Great Britain – six at the Barcelona Paralympics in 1992. As director of Paralympic integration at the London Olympics in 2012, he was integral to making the games an overwhelming success.
His blindness has never held him back and since becoming a member of the House of Lords in 2013, the 51-year-old has campaigned on issues close to his heart: for example, ensuring legal recognition of British Sign Language and railing against financial exclusion. Among his victories was paving the way for people to get cashback at a local store without having to make a purchase.
Inspiration: Lord Holmes wins gold at the Barcelona Paralympics in 1992
On Thursday, Holmes will ‘put the Government on the spot’ when he asks the Economic Secretary to the Treasury, Andrew Griffith, to explain why the roll-out of banking hubs is painstakingly slow. Griffith is duty bound to respond.
So far, just four measly hubs (community banks, funded by the major high street banks, run by the Post Office, and which customers of all the banks can use) have got off the ground.
Yet, over the same period 847 bank branches have either been shut or told they are closing – leaving many communities bankless.
Holmes says this is unacceptable and that the roll-out of banking hubs should be speeded up as a matter of urgency before irreversible community damage is done.
‘Local residents and businesses need access to cash,’ he told me last week. ‘They also require a place where they can deposit cash or speak to a bank representative. More pressure needs to be applied to the banks to get this banking hub show on the road.’
I trust Holmes is listened to – prompting the great banking hub roll-out.
It can’t come soon enough.
Time for NS&I to notch up prize rate
A number of lovely Premium Bond holders have been in touch to say it is time for NS&I to notch up the prize rate from its current 3.3 per cent. It is hard to disagree with them.
Since the prize rate was increased from 3.15 to 3.3 per cent in March, base rate has been nudged up by 0.25 per cent – and is likely to increase again when the Monetary Policy Committee meets on May 11.
Such a move would get Dax Harkins’ reign as NS&I chief executive off to a flying start.