CQS NATURAL RESOURCES GROWTH AND INCOME PLC Investor Report
29 February 2024
CQS Natural Resources Growth and Income Fund
Key Fund Facts1
Fund Managers | Ian 'Franco' Francis |
Keith Watson | |
Robert Crayfourd | |
Launch Date | August 2003 |
Total Gross Assets | £138.4m |
Reference Currency | GBP |
Ordinary Shares | Net Asset Value: |
186.01 | |
Mid-Market Price: | |
152.25p | |
Dividend Yield | 3.7% |
(estimated) | |
Net gearing4 | 8.5% |
Discount | (18.1%) |
Ordinary Shares in Issue 66,888,509 | |
Annual Management | 1.2% on adjusted net |
Fee | assets |
Bloomberg | CYN LN |
Reuters | CYN.L |
Sedol | 0035392 |
Year End | 30 June |
Contact Information | contactncim@cqsm.com |
Company Broker | Cavendish Capital |
Markets Limited | |
020 7220 0500 | |
AGM | December |
Dividend Information | 1.26p interim paid 27 |
2023/24 | November 2023 |
1.26p interim paid 23 | |
February 2024 | |
Fiscal Year-End | 30 June |
Previous Dividend | 2012/13 Total 5.50p |
Information | 2013/14 Total 5.60p |
2014/15 Total 5.60p | |
2015/16 Total 5.60p | |
2016/17 Total 5.60p | |
2017/18 Total 5.60p | |
2018/19 Total 5.60p | |
2019/20 Total 5.60p | |
2020/21 Total 5.60p | |
2021/22 Total 5.60p | |
2022/23 Total 8.60p | |
Investor Report | Monthly Factsheet |
Annual Report & | Published: October |
Accounts | |
Results Announced | Finals: October |
Interims: March | |
Please see page 2 for footnotes.
Portfolio Managers
Ian Francis, Keith Watson and Robert Crayfourd
Fund Description
The Fund aims to generate capital growth and income, predominantly from a portfolio of mining and resource equities, and from mining, resource and industrial fixed interest securities.
Key Advantages for the Investor
- Access to under-researched, mid and smaller-cap companies in the Natural Resources sector
- Quarterly dividend paid to shareholders
- Potential inflation hedge
Ordinary Share and NAV Performance2
Since | |||||||
1 Month | 3 Months | 6 Months | 1 Year | 3 Year | 5 Year | Inception | |
(%) | (%) | (%) | (%) | (%) | (%) | (%) | |
NAV | (4.1) | (6.3) | (9.5) | (13.2) | 35.4 | 105.8 | 550.0 |
Share Price | (3.8) | (14.4) | (11.1) | (14.1) | 20.5 | 109.7 | 489.9 |
Commentary3
While the unchanged US FED rate on the last day of January provided little to excite markets, the subsequent release of higher-than-expected US Non-Farm Payroll (NFP) data prompted bond markets to rethink the anticipated pace of future rate changes.
While initially weighing on sentiment towards commodities, much of the initial knee-jerk strengthening of the dollar index unwound over the latter half of the month as China returned from its Lunar New Year holiday. Economic data remained soft, with the Manufacturing Purchasing Managers' Index (PMI) figures for January remaining in contraction for both China and the US, though the rate of contraction slowed in both regions representing a modest trend improvement.
Against the relatively tepid backdrop, the Fund NAV declined 4% during February. Following the extremely strong recent performances, the share prices of gold producer Emerald Resources and uranium developer Nexgen pulled back 17% and 8% respectively in sterling terms over the month. The price of oil rig leasing company Transocean continued to slip, registering a 13% decline in sterling terms.
Helping to counter the drag from these stocks were strong contributions from Australian gas explorer Tamboran. The share price of which bounced 28% in sterling terms after its recent placing in which the Fund participated, together with a 19% sterling rise in US crude producer Diamondback Energy.
Iron ore markets remained noticeably weak following the news announced at the end of January that Chinese property developer Evergrande was to enter receivership. Despite the widely anticipated support of a 25bp drop in mortgage rates to 3.95%, this was not enough to prop up iron ore prices which declined by nearly 10% in February. The Fund still has zero iron ore exposure.
In contrast, the price of nickel was boosted by news that reduced metal output from Russia's Norilsk Nickel, which typically supplies approximately 10% of global nickel units, could continue for two years. This was due to difficulties in sourcing parts for a key smelter upgrade and the possibility of tougher Western sanctions against the country.
Thermal coal proved to be one of the best-performing commodities in February. The Australian seaborne benchmark increased by more than 12%, noticeably spurred by tightening safety regulations in China and augmenting proposed sanctions against the Russian coal exporters, Siberian Coal and Energy Company and Mechel. Unfortunately, related coal mining equities appeared to pay little attention to the improved outlook with most ending the month down. Crude prices also performed relatively well with the Brent and WTI rising by 2-3%, as hopes of an Israel- Hamas ceasefire ebbed.
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Monthly Investor Report - CQS Natural Resources Growth and Income Fund - February 2024
Commentary (Continued)3
Heightened tensions continue to affect major energy transport routes, which continue to support shipping rates as vessels are required to sail longer routes around South Africa, with a knock-on rise in fuel costs on a delivered basis.
Natural gas benchmarks remained weak. With regional inventories in Europe and Asia more than sufficient to cover expected needs into the Northern Hemisphere's summer, both the diminished gas demand from these regions and the increased seaborne export capacity anticipated via Canada's soon-to-be-finished Coastal Gas Link pipeline weighed on the sector. However, near-dated benchmark Natural Gas prices have dropped well below marginal production costs in the US, the top global Liquefied Natural Gas (LNG) exporter and futures indicate prices normalise to typical $3-4/MMBtu by the end of this year in anticipation of the US industry responding to curtail supply. Nuclear fuel prices also declined, with the U3O8 price closing February 5.5% lower after Canadian producer Cameco indicated that it is assessing expansion options at its main McArthur River and Cigar Lake operations and the potential to restart its mothballed Rabbit Lake mine.
After a sharp but brief sell-off following the US Non-Farm Payroll data, gold ended the month unchanged. This was supported by softness in broader market sentiment and geopolitical uncertainty, especially in the Middle East. However, related precious metal mining equities remained under pressure, as illustrated by the 5-6% declines registered by the GDX and GDXJ ETFs. The gold price continues to trend upwards helped by ongoing central bank buying and improved retail demand in China and India, which has more than offset selling by physically backed ETFs. Should
Portfolio Analysis1
Sector | Region |
Other | ||
Fixed | 9.4% | Precious |
Interest | ||
Metals | ||
3.4% | ||
25.7% | ||
Lithium | ||
4.9% | ||
Coal | ||
5.8% | ||
Base | ||
Metals | ||
6.0% | ||
Shipping | Uranium | Oil & Gas |
9.0% | 25.6% | |
10.4% |
Africa | Europe |
7.6% | 2.3% |
Asia | |
7.9% | North |
America | |
Latam | 42.8% |
8.0% | |
Global | |
12.2% | |
Australia | |
19.2% |
Top 20 Holdings (% of MV) 1,7
Name | (% of MV) |
NEXGEN ENERGY NPV | 8.1 |
BW LPG USD0.01 | 4.8 |
EMERALD RESOURCES NPV | 4.4 |
DIAMONDBACK ENERGY USD0.01 | 4.1 |
TRANSOCEAN USD0.01 | 3.6 |
TAMBORAN RESOURCES CORP CDI NPV | 3.4 |
REA HLDGS 9% CUM PREF GBP1 | 3.3 |
FRONTLINE USD1.0000 | 3.3 |
VERMILION ENERGY COM NPV | 3.0 |
EOG RESOURCES USD0.01 | 2.9 |
Top 10 Holdings Represent | 40.7 |
Name | (% of MV) |
DIVERSIFIED EN CO GBP 0.2 | 2.6 |
PRECISION DRILLING COM NPV | 2.5 |
KARORA RESOURCES NPV | 2.5 |
LEO LITHIUM NPV | 2.4 |
WEST AFRICAN RESOURCES NPV | 2.3 |
ORA BANDA MINING NPV | 2.2 |
FORAN MINING CORP NPV | 2.2 |
CALIBRE MINING CORP NPV | 1.9 |
PEABODY ENERGY CORP NPV | 1.9 |
UR ENERGY NPV | 1.7 |
Top 20 Holdings Represent | 63.0 |
AIFMD Leverage Limit Report (% of NAV)
Gross Leverage (%)5 | Commitment Leverage (%)6 | |
CQS Natural Resources Growth and Income | 109 | 109 |
Sources: 1CQS as at the last business day of the month indicated at the top of this investor report. 2Total return performance net of fees and expenses as at the last business day of the month indicated at the top of this investor report. 3All market data sourced from Bloomberg unless otherwise stated. All returns quoted in local currency unless otherwise stated. The Company may since have exited some or all of the positions detailed in the commentary. 4CQS as at the last business day of the month indicated at the top of this investor report. 5CQS, as at the last business day of the month indicated at the top of this investor report. For methodology details see Article 4(3) of Directive 2011/61/EU (AIFMD) and Articles 6, 7, 9 and 10 of Delegated Regulation 231/2013. 6CQS as at the last business day of the month indicated at the top of this investor report. For methodology details see Article 4(3) of Directive 2011/61/EU (AIFMD) and Articles 6, 8, 9, 10 and 11 of Delegated Regulation 231/2013. 7All holdings data are rounded to one decimal place. Totals may therefore differ to sum of constituents. These include historic returns and past performance is not a reliable indicator of future results. The value of investments can go down as well as up. Please read the important legal notice at the end of this document.
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Monthly Investor Report - CQS Natural Resources Growth and Income Fund - February 2024
Important Information
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Information contained in this document should not be viewed as indicative of future results as past performance of any Transaction is not indicative of future results. Any investment in a CQS Fund or any of its affiliates involves a high degree of risk, including the risk of loss of the entire amount invested. The value of investments can go down as well as up. Don't invest unless you're prepared to lose all the money you invest. This is a high-riskinvestment and you are unlikely to be protected if something goes wrong.Future performance is subject to taxation which depends on the personal situation of each investor and which may change in the future. Investments may lead to a financial loss if no guarantee on the capital is in place. An investment in any CQS Fund will involve a number of material risks which include, without limitation, risks associated with adverse market developments, currency and exchange rate risks, risk of counterparty or issuer default, and risk of illiquidity. Any assumptions, assessments, targets (including target returns and volatility targets), statements or other such views expressed herein (collectively "Statements") regarding future events and circumstances or that are forward looking in nature constitute CQS' subjective views or beliefs and involve inherent risk and uncertainties beyond CQS' control. Any indices included in this document are for illustrative purposes only and are not representative of CQS Funds in terms of either composition or risk (including volatility and other risk related factors). Unless stated to the contrary CQS Funds are not managed to a specific index.
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PRI Note: PRI is an investor initiative in partnership with UNEP Finance and the UN Global Compact. GMv11.
G1178974 / 03.24
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CQS Natural Resources Growth and Income plc published this content on 19 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 March 2024 09:20:05 UTC.
