"I attach the annual report of Cayenne Trust, a listed closed ended fund of funds. The manager is Len Gayler, his investment report is always worth a read. Here is a section on BlackRock World Mining which may interest you and your readers:

"Investors will note that the Company has a holding in BlackRock World Mining Trust. This investment has performed extremely well since early last year when the position was first purchased. Despite this outstanding performance the trust trades at close to a 20% discount to net asset value. A discount of this magnitude is normally reserved for fourth quartile not first quartile performance. Maybe their board should consider whether, with a market capitalisation of nearly £1billion, there is now too much stock in issue and act accordingly.

"The issue of an over supply of stock is not limited to BlackRock World Mining. Many trusts are now of such a size that the marginal retail buyer is having less impact on valuations. Many institutions have vacated the sector, most arbitrageurs are impotent and proprietary market-making is virtually nonexistent. While this has caused a decline in liquidity it has also created an opportunity for your Company. It may take more patience to acquire a position and greater care to exit it but the potential rewards for investors are increased as competition in the sector declines. Despite being a positive environment for your Company, this is a situation that the industry needs to address. Fund managers and boards need to show leadership to help minimise share price volatility. While some, such as Edinburgh Partners, Troy and JP Morgan, are always on hand to be the buyer of last resort, others seem happy to let investors fend for themselves in difficult times, only to be more than willing to issue new stock if their particular style is ever back in favour. There is no reason, other than self interest, why trusts with liquid portfolios should trade at a significant discount to net asset value. The sooner managers and boards realise this, the better life will be for investment companies and their shareholders."

David Fuller's view Bloomberg currently shows BlackRock World Mining Trust's discount to NAV at 15.42%, which is certainly not unsubstantial. To declare my interest for new subscribers, BRWM (LN) (weekly & daily), which is becoming somewhat overstretched relative to its MA once again, is one of my top-10 personal long-term investment positions, by weighting, and I also have a trading long reopened on 4th January 2010.

Personally, I prefer it when IT (closed-end fund) managers let the markets determine the discount or occasional premium to NAV. If I like the market in question, I like the IT even more if I can buy at a deep discount to NAV. Today, an investor can buy BRWM for less than 85p to the pound. This would presumably widen in the event of a reaction. If the discount eventually narrows significantly, not to mention trade at a premium, it would be another reminder that the sector and/or vehicle had become temporarily too popular.