FOR PROFESSIONAL AND INSTITUTIONAL INVESTORS USE ONLY PLEASE READ IMPORTANT DISCLOSURES INVESTMENT COMMENTARY NOV 2018 World Mining Fund A sub- fund of BlackRock Global Funds Fund Manager(s): Evy Hambro Olivia Markham Capital at risk. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time. Past Performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Performance The Fund fell by 4.7% over the month, underperforming its benchmark, which was down by 2.6%. November was a negative month for the mining sector, as trade-war concerns continued to weigh on global economic growth expectations. The US Treasury yield curve inverted during the month, with yields for some shorter-dated Treasuries rising above those of some longer-dated ones. Importantly, however, the 10-year yield remained just above that of the 2-year. Inverting of the yield curve is typically viewed as a predictor of an impending recession. Market concerns also heightened around a potential faster-than-expected slowdown in China, as economic indicators such as manufacturing purchasing managers indices and loans data continued to soften. Our base case is that China will successfully manage a gradual slowdown, and it has been encouraging to see increased infrastructure spending coming through. Amid this macroeconomic backdrop, mined commodity performance was relatively resilient. We believe this reflects supply and demand in the physical markets for mined commodities still being healthy. Base metals performed well, with copper, zinc and aluminium up 3.2%, 4.1% and 1.2%, respectively. Precious metals also performed positively, with gold rising 0.3%, as broader equity-market weakness in the first half of the month stoked safe-haven buying. Having held up well so far in 2018, the bulk commodities were weak in November, with the iron-ore (62% Fe) price falling by 13.9%, for example. This appeared to reflect destocking by steel companies in response to declining margins and lower-thanexpected winter production cuts. While the move in iron ore was a sharp one, it s worth noting that the iron-ore (62% Fe) price has averaged $70/tonne this year, which, for diversified miners with average costs of delivery of iron ore (62% Fe) into China below $30/tonne, indicates very strong margins. The Fund s holdings in companies exposed to steel and iron ore were the main drag on relative performance during the month. Overweight positions in Bradespar, BHP Billiton, Rio Tinto and Arcelormittal were among the largest detractors, for example. Our underweight to the gold sector overall also negatively impacted relative performance, as gold companies outperformed broader mining stocks. However, our overweight positions in our favoured gold names, such as Newmont Mining, Randgold Resources and Franco Nevada, were positive contributors. Lastly, our overweight position in copper miner Lundin Mining was among the top performers. During the month, the company announced an increase to the life of a mine at its Candelaria copper asset in Chile, as well as a share buyback. MKTGM1218E-689117-1/5
Portfolio Activity During the month, we continued to reduce our underweight to diversified miner Anglo American. We also added to our position in our preferred recycling play. Outlook & Positioning After strong years in 2016 and 2017, this year has been more challenging for the mining sector so far. Sentiment has deteriorated on trade tensions, and mined commodity prices have fallen across the board as a result. It has been interesting to see financially traded commodities (eg, copper, zinc and aluminium) underperforming the physically traded ones (eg, iron ore and steel), where investors are unable to speculate as much. This suggests to us that underlying fundamentals remain strong, and weakness has been mainly driven by speculation. Meanwhile, underlying demand conditions in China appear to be stable, while we are seeing early signs of stimulus coming through. We believe we could be at peak pessimism around trade wars and are looking to add risk in the Fund. Meanwhile, mining shares are trading on attractive multiples versus history and relative to broader equities. The sector is trading on close to its highest-ever free cashflow yield, while relative price-to-book is close to a historic low. Finally, we believe the capital discipline story remains intact, as management teams remain focused on capital discipline and shareholder returns. Key Risks Exchange Rate Risk Overseas investment will be affected by movements in currency exchange rates. Specific Sector The fund invests in a limited number of market sectors. Compared to investments which spread investment risk through investing in a variety of sectors, share price movements may have a greater effect on the overall value of this fund. Smaller company investments Smaller company investments are often associated with greater investment risk than those of larger company shares. Emerging market risk Emerging market investments are usually associated with higher investment risk than developed market investments. Therefore the value of these investments may be unpredictable and subject to greater variation. Gold / mining funds Mining shares typically experience above average volatility when compared to other investments. Trends which occur within the general equity market may not be mirrored within mining securities. MKTGM1218E-689117-2/5
Key Risks Exchange Rate Risk Overseas investment will be affected by movements in currency exchange rates. Specific Sector The fund invests in a limited number of market sectors. Compared to investments which spread investment risk through investing in a variety of sectors, share price movements may have a greater effect on the overall value of this fund. Smaller company investments Smaller company investments are often associated with greater investment risk than those of larger company shares. Emerging market risk Emerging market investments are usually associated with higher investment risk than developed market investments. Therefore the value of these investments may be unpredictable and subject to greater variation. Gold / mining funds Mining shares typically experience above average volatility when compared to other investments. Trends which occur within the general equity market may not be mirrored within mining securities. MKTGM1218E-689117-3/5
Important information Unless indicated the fund information displayed only provides summary information. Investment should be made on the basis of the relevant booklet together with the Prospectus and Key Investor Information Document, which are available from the Manager. Reference to individual investments mentioned in this communication is for illustrative purposes only and should not be construed as investment advice or investment recommendation. The number of shares quoted for each Fund are indicative and actual numbers may fall outside of the ranges shown. This material is for distribution to Professional Clients (as defined by the FCA or MiFID Rules) and Qualified Investors only and should not be relied upon by any other persons. Issued by BlackRock Investment Management (UK) Limited (authorised and regulated by the Financial Conduct Authority). Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Registered in England No. 2020394. Tel: 020 7743 3000. For your protection, telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited. Austria: For further information, the prospectus, Key Investor Information Document, annual report and semiannual report can be obtained free of charge in hardcopy form from the Austrian paying agent: Raiffeisen Zentralbank Österreich AG, A-1030 Vienna, Am Stadtpark 9. Germany: This is a financial promotion. For further information, the prospectus, Key Investor Information Document, annual report and semi-annual report can be obtained free of charge in hardcopy form from the German information centre: BlackRock Investment Management (UK) Limited, German Branch, Frankfurt am Main, Bockenheimer Landstraße 2 4, 60306 Frankfurt am Main. The paying agent in Germany is J.P. Morgan AG, CIB / Investor Services Trustee & Fiduciary, Taunustor 1 (Taunus Turm), D-60310 Frankfurt am Main. Hong Kong: In Hong Kong, this information is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong. This material is for distribution to "Professional Investors" (as defined in the Securities and Futures Ordinance (Cap.571 of the laws of Hong Kong) and any rules made under that ordinance.) and should not be relied upon by any other persons or redistributed to retail clients in Hong Kong. For Hong Kong investors, please refer to the BlackRock Global Funds Offering Documents for details, including risk factors. Netherlands: The risk indicator shown on this document refers to the A2 share class of the Fund. Higher or lower risk may apply to the other share classes of the Fund. Issued in the Netherlands by the Amsterdam branch office of BlackRock Investment Management (UK) Limited: Amstelplein 1, 1096 HA Amsterdam, Tel: 020-549 5200. BlackRock Global Funds ("BGF") is a UCITS (icbe) as defined in section 1:1 Financial Markets Supervision Act (Wet op het financieel toezicht; "FMSA"). BGF and its sub funds are listed in the register as defined in section 1:107 FMSA. Please refer to the Key Investor Information Document (essentiële beleggersinformatie; "EBI") for further information about BGF and its sub funds. The prospectus and EBI of BGF and its sub funds are available on BlackRock's website www.blackrock.nl. All financial investments contain a certain risk. The value of the assets managed by BGF and its sub funds may greatly fluctuate as a result of the investment policy and your initial investment is not guaranteed. Poland: BGF has been registered on the official list of the Financial Supervision Commission (Komisja Nadzoru Finansowego) for distribution in Poland. Issued in Poland by the representative office BlackRock Investment Management (UK) Limited, Dubiński, Fabrycki, Jeleński i Wspólnicy Kancelaria Prawna sp.k., ul. Zielna 37, 00-108 Warszawa. Paying agent in Poland is Bank Handlowy w Warszawie SA, ul. Senatorska 16, 00-950 Warsaw, Poland. MKTGM1218E-689117-4/5
Singapore: In Singapore, this information is issued by BlackRock (Singapore) Limited (company registration number: 200010143N) for use only by institutional investors as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore and should not be relied upon by or redistributed to any other persons in Singapore. The above warnings and fund specific risks are explained in greater detail in in the current Prospectus and you should read them before investing. Spain / Portugal: Certain share classes of certain Fund(s) mentioned in this document are registered for public distribution in Spain and Portugal alongside each Prospectus for the Fund. In Spain, BlackRock Global Funds (BGF) is registered with the number 626 in the Comisión Nacional del Mercado de Valores de España (CNMV) and the Prospectus for each registered fund has been registered with the CNMV. In Portugal, certain share classes of certain BGF funds are registered with the Comissão do Mercado de Valores Mobiliários (CMVM) and the Prospectus for each registered fund has been registered with the CMVM. This document contains BLACKROCK INC. products or services that might be offered directly or indirectly within the Andorran jurisdiction, and it should not be regarded as solicitation of business in any jurisdiction including the Principality of Andorra. Switzerland: For professional clients and qualified investors only. The BlackRock Global Funds (BGF) World Mining Fund is domiciled in Luxembourg. BlackRock Asset Management Schweiz AG, Bahnhofstrasse 39, CH- 8001 Zurich, is the Swiss representative and State Street Bank International GmbH, Munich, Zurich Branch, Beethovenstrasse 19, CH-8002 Zurich, the Swiss Paying Agent. The Prospectus, Key Investor Information Document, the Articles of Incorporation, the latest and any previous annual and semi-annual reports are available free of charge from the Swiss Representative. Investors should read the fund specific risks in the Key Investor Information Document and the Prospectus. BlackRock Global Funds (BGF) is an open-ended investment company established and domiciled in Luxembourg which is available for sale in certain jurisdictions only. BGF is not available for sale in the U.S. or to U.S. persons. Product information concerning BGF should not be published in the U.S. It is recognised under Section 264 of the Financial Services and Markets Act 2000. BlackRock Investment Management (UK) Limited is the UK distributor of BGF. Most of the protections provided by the UK regulatory system, and the compensation under the Financial Services Compensation Scheme, will not be available. A limited range of BGF sub-funds have a reporting fund status A sterling share class that seeks to comply with UK Reporting Fund Status requirements. Subscriptions in BGF are valid only if made on the basis of the current Prospectus, the most recent financial reports and the Key Investor Information Document, which are available on our website. Prospectuses, Key Investor Information Documents and application forms may not be available to investors in certain jurisdictions where the Fund in question has not been authorised. Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer. 2018 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, ishares, BUILD ON BLACKROCK, SO WHAT DO I DO WITH MY MONEY and the stylised i logo are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. MKTGM1218E-689117-5/5