In the second edition of our fund manager talent hunt, our attention falls to mining specialist and fund manager Catherine Raw of BlackRock.
A protégé to industry veteran Evy Hambro, Raw has been an active fund manager at BlackRock for the past 18 months, having first entered the world of fund management and investment in January 2004.
En route to the world of fund management, Raw shelved plans to be an astronaut before following the mining path. She jokes: ‘I got to Cambridge thinking, great I am going to be Stephen Hawking, and then realised my maths was not at an astrophysicists’ level.’
Having joined Merrill Lynch – which was merged into BlackRock in September 2006 – as a general graduate working on the strategy side, Raw was presented with excellent opportunity to use her practical background early on.
‘About six months in, the graduate on the mining side went back to Belgium, so I focused just on mining, working closely alongside Graham Birch, Evy and Richard Davis. For the first year or so I was just shadowing them, writing up meetings, making the business models for things I found interesting.’
In her role, Raw brought with her academic experience of the mining industry, having studied geology at Cambridge and also a Masters in mining from Imperial College London. This is along with practical experience at Anglo American in South Africa, as well as work in Northern Sweden.
‘The beginning of my time at Merrill Lynch and how it came about is a bit random, as I applied to four or five banks for an internship and, without any banking experience, only Merrill Lynch came back to me.’
‘I really did not have a financial background as I had spent the summer either in Italy or in the mines in Northern Sweden.’
Once cutting her teeth on the analyst side, Raw moved into the fund management hot seat following the departure of Graham Birch in 2010.
This move to assist Euro Stars A-rated manager Hambro – who has a formidable presence in both mining and precious metals investing – may have appeared daunting but Raw stresses her time in the team itself had served her well.
‘Probably from about 2007 I began to manage some of the smaller funds in our database, rather than some of the larger ones you see now,’ she says.
‘When Graham departed in 2010, Evy became the lead manager on all the big funds, and I was starting to do more and more work on them as there is only so much one manager can do.’
Despite her increased responsibilities, Raw stresses the team construct of the mining outfit at BlackRock. This, she says, is vitally important in the construction of the portfolio.
‘We want to be in a position where every single stock we have, everybody knows about them and why and how they fit into the portfolio.'
'The big issue with fund managers and analysis teams is they look at the stock but don’t look at the big picture, what a certain stock means for the composition, the risk balance and so on. Are they selecting high quality in low growth or vice versa, they need to know.’
The fund has a strong track record since its launch in 1997 – having returned 496% while its Citywire benchmark has risen 388%. However, the 19 months since Raw’s appointment have been tougher, with a loss of 31% while the index fell 26%.
Raw acknowledges a host of macro headwinds – such as the US election, eurozone crisis and Chinese growth – have hindered performance but the longer term view of the sector is slightly rosier.
‘The mood is overly pessimistic in terms of the levels of commodity production that will be made in the next three-to-five years and perhaps some people are too optimistic on the supply side growth going forward.’
‘We are more bullish on the commodity picture after about three years out, however,’ she says.
One of Raw’s strengths, and something she is looking to build on under Hambro, is the ability to integrate her practical knowledge of the sector into decision-making.
For example, the Lonmin mining incident – which resulted in the deaths of around 34 striking miners – was something which brought home Raw’s area of expertise.
Having witnessed the South African mining industry first hand during her time with Anglo American in Johannesburg, as well as centring on it for her Masters, Raw says she was able to offer a different opinion to some of her peers.
‘I perhaps had a better understanding of some of the subtleties and some of the issues and embedded ideas as I had been there. I had been based in Johannesburg with Anglo-American, where I had to be led around by an armed guard, so I was aware of the situation on the ground,’ she says.
This on-the-ground knowledge is championed by Raw as not just one her strong points but also a major boon of BlackRock’s widespread analyst network and its regular visits to the African continent.
‘The visits are very important because that is where we can get an analysis of things. If you look at the coup that took place in Mali early last year, Randgold Resources has a lot of operations there. What being there on the ground helped us understand is what a different country it is within itself,’ she says.
Raw says the market was ‘terrified’ about what the coup meant for Randgold’s operations but headlines and news tickers missed out one important aspect – how integrated a company like Randgold can become in a resource rich nation.
‘You have to understand where Randgold is placed within the country, how important it is to the country’s GDP and also the strong links it has made with politicians and the government.’
‘This was simply something that the market didn't understand and there was no way that Randgold would be in a position where it would not be able to operate. If we had not been there though, it is hard to say whether we would be able to say that with confidence.’
Chaos and order
Another market where Raw sees potential when all the rest of the world sees is chaos is in the Democratic Republic of Congo. The central African state is as well known for its size – being the second largest African country – as it is for political instability, poverty and disorder.
However, Raw warns against oversimplification and also a misplaced focus on what is actually wrong in the country.
‘The headline risks and the things you read about are fears over being murdered or kidnapped there but the roads are the thing to watch out for. That is where people die. That is what really matters and if you want to see if a country is really improving then look at its roads, look at its infrastructure.’
Once Raw’s team took a view that infrastructure was developing – rather than the political picture – they were able to instigate visits and begin investing more into another of Africa’s resource rich nations.
‘We saw that Freeport had gone there and we saw mine review after mine review going on and we looked closely at how we can avoid a lot of the pitfalls.
‘We work on the principle that if you are that terrified that you cannot even go there, how would you be able to invest as it is clearly not the safest jurisdiction?’
- January 2004 – joined Merrill Lynch as a graduate
- January 2010 – handed greater responsibility following departure of Graham Birch
- March 2011 – named as co-portfolio manager on BGF World Mining Fund
- MA degree with honours in Natural Sciences from Downing College, Cambridge
- MSc degree in Mineral Project Appraisal from Imperial College, London