CQS Natural Resources Fund Reports 69.3% NAV Surge Amid Key Portfolio Manager Resignations

Blowout half-year: 69.3% NAV total return and a big strategic pivot

CQS Natural Resources Growth and Income PLC has posted a thumping set of unaudited half-year numbers for the six months to 31 December 2025. Net asset value (NAV) per share total return came in at 69.3% and the share price total return was an even punchier 83.1%. For context, the trust outpaced both of its comparators – the MSCI World Metals and Mining Index at 46.5% and the MSCI World Energy Index at 11.0% (both sterling adjusted).

Performance was supercharged by a heavy tilt to precious metals, with the managers taking some profits and rotating into energy as the period progressed. There’s plenty to like in the numbers, but there’s also a headline-grabbing governance twist: the named portfolio managers have tendered their resignations post period-end. More on that below.

Key numbers investors need to know

Metric	Result/Status	Context
NAV total return	69.3%	Six months to 31 Dec 2025
Share price total return	83.1%	Six months to 31 Dec 2025
Comparators	Metals & Mining 46.5%; Energy 11.0%	Sterling adjusted
NAV per share	349.69p	Up from 212.56p at 30 Jun 2025
Share price	355.00p	Up from 199.50p at 30 Jun 2025
Premium/(discount)	1.5% premium at 31 Dec	9.3% discount at 20 Mar 2026
Dividends per share	13.02p	6.02p (Nov) + 7.00p (Feb)
Dividend yield	5.2%	Based on 18.53p over last four quarters
Ongoing charges	1.8%	Down from 2.0%
Net gearing	6.1%	Was 4.8% at start of period

Notes: NAV total return includes dividends; “premium/discount” is the percentage difference between the share price and NAV; “gearing” is borrowing as a percentage of net assets, which can magnify gains and losses.

What drove the outperformance: precious metals first, energy next

The trust’s near-50% precious metals weighting was the primary engine, with gold and silver rallying hard on geopolitics, central bank buying and currency debasement fears. Management aims to cap precious metals at around 50% (non-formally) and took profits as prices ran, reallocating largely to energy – particularly in January – where equities had lagged broader commodities.

• Commodity mix at 31 December 2025: Precious metals 53.3%, Uranium 12.0%, Oil & Gas 11.6%, Copper 6.0%, Shipping 4.4%, Base metals (polymetallic) 6.9%.
• Uranium remains a key theme, with the market described as in deficit and a “nuclear renaissance” underway; NexGen received its final permit in March.
• Base metals exposure stayed low; the team is cautious on near-term copper demand despite AI/data centre noise, with little sign of recovery in Chinese property.

Opinion: the tilt toward precious metals caught the macro mood perfectly, and the subsequent rotation into energy looks pragmatic given tightening spare capacity risks and improving sector valuations.

Enhanced dividend policy: 8% of NAV paid quarterly

The board’s “enhanced 8%” policy pays 2% of the preceding quarter-end NAV per share each quarter. Two interim dividends for the current year have been paid so far – 6.02p (November 2025) and 7.00p (February 2026) – totalling 13.02p for the half year. The indicated dividend yield is 5.2%, based on 18.53p per share over the most recent four quarters.

Why it matters: this approach produces a high, variable income tied to NAV. In strong markets, payouts rise; in weak markets they can fall. It aligns income with portfolio performance but expect variability.

Capital management: issuance at a premium, buybacks on a discount

The board sharpened its discount control tools, stating an aim to keep the discount in single digits in normal conditions. During the half year, demand drove a persistent premium, allowing the company to sell 712,500 shares from treasury at an average 330.10p. There was one buyback of 10,000 shares at 265.13p when the discount briefly widened.

Post period-end, it sold a further 1,437,500 treasury shares to meet demand, then, as the market reacted to events in Iran, the discount widened and the company bought back 573,906 shares from 6 March to 20 March 2026. The board also refreshed issuance authority on 2 March, allowing new shares up to 20% of issued share capital (excluding treasury).

Translation: issuing at a premium and buying back on a discount adds value for continuing shareholders. This is exactly how a closed-ended fund should use its toolkit.

Gearing and the loan facility: capacity trimmed, flexibility retained

The loan facility was cut from £25 million to £15 million in September to match the smaller trust post-Tender Offer. Drawn debt stood at £11.5 million at 31 December 2025 at an indicative 5.32% fixed to 12 March 2026, rising to £14.5 million at an indicative 5.08% fixed to 12 June 2026. A further £3 million was drawn in early March to seize opportunities created by geopolitics.

With net gearing at 6.1% and a 30% maximum loan-to-value covenant, the balance sheet looks within sensible guardrails. Lower facility size should trim costs without crimping firepower.

Manager changes: resignations notified; interim support in place

After the period end, the company was told that named portfolio managers Keith Watson and Robert Crayfourd have tendered their resignations to the Investment Manager. During their notice period, CQS has engaged senior Manulife Investment Management Group portfolio managers, Diana Racanelli and Craig Bethune, to work alongside them. There is no stated change to process, strategy or operations. The company has also agreed six months’ protective notice with the Investment Manager and is evaluating options to ensure a smooth and sustainable transition.

My take: this is a genuine “key person” risk. The board’s swift protective notice and the addition of seasoned Manulife managers help steady the ship, but investors should expect the discount to be more volatile until there’s clarity on the long-term management set-up.

Portfolio snapshot: where the money sits now

• Top holdings at 31 December 2025 include Emerald Resources (6.7%), NexGen Energy (6.6%), Ora Banda (4.2%), West African Resources (4.2%), Greatland Gold (4.2%).
• By listing, exposure skews to Canada 43.8% and Australia 27.4%, with the US at 14.4% and the UK at 10.1%.
• Capital gains on investments were £49.9 million in the half, driving a total return per share of 103.97p (revenue EPS 0.17p).

The trust also benefited from strong moves in names such as SolGold and Solaris in copper development, while maintaining selective exposure to shipping and oilfield services to play energy logistics and rigs.

Context: the tender offer and who benefited

In October, the company completed a major Tender Offer, buying back 29,344,059 shares with a Tender Price of 208.33p. The board highlights that the NAV has since recovered to pre-Tender levels despite the smaller asset base. Shareholders who stayed for the ride have so far been well rewarded, with the share price up to 355.00p at 31 December 2025 and peaking at 440p on 2 March 2026 before easing to 347p by 20 March 2026.

Outlook and my verdict

The team expects ongoing geopolitical volatility to keep resource security front and centre. They have tilted more heavily into oil and gas explorers, producers, rigs and shipping as spare capacity tightens and valuations imply long-term oil around $60-65/bbl. At the same time, precious metals remain the single largest exposure and, in their view, still have upside given US fiscal deficits and stagflation risks.

Glass-half-full: standout performance, a high (if variable) dividend policy, proactive capital management and a nimble mandate that can reallocate quickly. Glass-half-empty: manager departures add uncertainty, the discount has widened post period-end, and the portfolio’s macro sensitivity cuts both ways.

What to watch next

• Manager continuity: any formal changes to the investment management agreement and who will lead the portfolio thereafter.
• Discount control in practice: pace of buybacks if the discount remains wide.
• Dividend trajectory: quarterly payouts will flex with NAV under the 8% policy.
• Commodity mix: how far the rotation into energy goes, and whether precious metals exposure stays near the 50% cap.
• Gearing level: deployment of the now £15 million facility as volatility creates opportunities.

Bottom line: an excellent half-year built on the right calls in precious metals and a timely tilt to energy. Keep an eye on the management transition – if the board lands a robust solution, today’s discount could prove an opportunity.