BlackRock Energy and Resources Income Trust plc (LON:BERI) has announced its latest portfolio update.
All information is at 31 March 2024 and unaudited.
For more information on BlackRock Energy and Resources Income Trust and how to access the opportunities presented by the energy and resources markets, please visit www.blackrock.com/uk/beri
Performance at month end with net income reinvested
| Three | One | Three | Five | ||||
| Months | Year | Years | Years | ||||
| Net asset value | 1.5% | 0.6% | 54.0% | 99.1% | |||
| Share price | -0.2% | -9.2% | 39.7% | 88.3% | |||
| At month end | ||||||||||||
| Net asset value – capital only: | 129.38p | |||||||||||
| Net asset value cum income1: | 129.54p | |||||||||||
| Share price: | 113.50p | |||||||||||
| Discount to NAV (cum income): | 12.4% | |||||||||||
| Net yield: | 3.9% | |||||||||||
| Gearing – cum income: | 12.3% | |||||||||||
| Total assets: | £163.7m | |||||||||||
| Ordinary shares in issue2: | 126,386,194 | |||||||||||
| Gearing range (as a % of net assets): | 0-20% | |||||||||||
| Ongoing charges3: | 1.19% | |||||||||||
2 Excluding 9,200,000 ordinary shares held in treasury.
3 The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain other non-recurring items for the year ended 30 November 2023. In addition, the Company’s Manager has also agreed to cap ongoing charges by rebating a portion of the management fee to the extent that the Company’s ongoing charges exceed 1.25% of average net assets.
Sector Overview
| Mining | 44.8% | |||
| Traditional Energy | 30.7% | |||
| Energy Transition | 25.3% | |||
| Net Current Liabilities | -0.8% | |||
| —– | ||||
| 100.0% | ||||
| ===== | ||||
| Sector Analysis | % Total Assets^ | Country Analysis | % Total Assets^ | |||||||||
| Mining: | ||||||||||||
| Diversified | 21.8 | Global | 54.9 | |||||||||
| Copper | 6.5 | USA | 19.8 | |||||||||
| Steel | 4.3 | Canada | 10.0 | |||||||||
| Industrial Minerals | 3.5 | Latin America | 4.3 | |||||||||
| Metals & Mining | 2.7 | Germany | 2.5 | |||||||||
| Gold | 2.5 | Other Africa | 2.5 | |||||||||
| Aluminium | 2.0 | Australia | 2.2 | |||||||||
| Nickel | 1.3 | United Kingdom | 2.0 | |||||||||
| Platinum Group Metals | 0.2 | France | 2.0 | |||||||||
| Subtotal Mining: | 44.8 | Ireland | 0.6 | |||||||||
| Net Current Liabilities | -0.8 | |||||||||||
| —– | ||||||||||||
| Traditional Energy: | 100.0 | |||||||||||
| E&P | 13.8 | ===== | ||||||||||
| Integrated | 8.4 | |||||||||||
| Distribution | 3.4 | |||||||||||
| Oil Services | 2.7 | |||||||||||
| Oil, Gas & Consumable Fuels | 1.4 | |||||||||||
| Refining & Marketing | 1.0 | |||||||||||
| Subtotal Traditional Energy: | 30.7 | |||||||||||
| Energy Transition: | ||||||||||||
| Energy Efficiency | 10.2 | |||||||||||
| Electrification | 7.0 | |||||||||||
| Renewables | 5.1 | |||||||||||
| Transport | 3.0 | |||||||||||
| Subtotal Energy Transition: | 25.3 | |||||||||||
| Net Current Liabilities | -0.8 | |||||||||||
| —- | ||||||||||||
| 100.0 | ||||||||||||
| ===== | ||||||||||||
Ten Largest Investments
| Company | Region of Risk | % Total Assets | ||||||||||
| Rio Tinto | Global | 4.4 | ||||||||||
| Teck Resources | Global | 3.9 | ||||||||||
| Glencore | Global | 3.2 | ||||||||||
| Shell | Global | 3.1 | ||||||||||
| BHP | Global | 3.0 | ||||||||||
| NextEra Energy | United States | 2.9 | ||||||||||
| Anglo American | Global | 2.7 | ||||||||||
| Canadian Natural Resources | Canada | 2.6 | ||||||||||
| Filo Corp | Latin America | 2.5 | ||||||||||
| ConocoPhillips | Global | 2.4 | ||||||||||
Commenting on the markets, Tom Holl and Mark Hume, representing the Investment Manager noted:
The Company’s Net Asset Value (NAV) per share increased by 8.5% during the month of March (in GBP terms).
Global equity markets rose in March supported by central bank commentary. The US Federal Reserve maintained guidance for three interest rate cuts in 2024, which was supportive for equity markets given US jobs data and CPI indicated higher growth and stickier inflation than previously forecast. Bond yields continued to react to these data, moving higher towards month end. Economic survey data in Europe and China was consistent with economic growth, further supporting equity market confidence. Geopolitical risk remained elevated with continuing attacks on shipping in the Red Sea, underlining the importance of energy security and resilient supply chains. Against this backdrop, global equity markets, represented by the MSCI All Country World Index, had increased by 3.1%.
March was a positive month for the mining sector, outperforming broader equity markets. Improvements in economic data from the US and China helped boost investor sentiment and demand for mining stocks during the period. China’s manufacturing PMI rose above 50 for the first time since September 2023, increasing from 49.1 to 50.8. Copper stood out among industrial metals, delivering strong performance driven by tight physical markets and rising demand for its use in electricity grids. The severity of the constraints on copper supply was highlighted by refining charges in China falling close to zero, having been ~US$80 six months ago (lower refining charges suggest refiners are struggling for materials and are cutting charges to be more competitive as a result). On the other hand, ongoing weakness in China’s property market started to translate into some softness in steel demand and iron ore prices came under pressure. The Chinese government announced plans to reinstate pollution control measures, which is expected to result in production cuts for highly polluting industries such as iron ore and cement. For reference, the prices for iron ore (62% fe) and nickel fell by 13.2% and 6.2% respectively, whereas zinc rose by 0.5%. Meanwhile, precious metals performance was strong during the month due to concerns around inflation and robust physical demand for gold. Gold, silver, platinum prices rose by 8.3%, 9.6% and 2.3% respectively.
Within the energy sector, sticky inflation and geopolitical risk was supportive for commodities and commodity equities, where higher oil prices are beginning to drive positive revisions to consensus energy earnings. Refining margins remain above pre-covid levels suggesting demand strength and tightness in supply, whilst Ukraine targeting Russian refineries was also a contributing factor. M&A activity has remained a feature in the energy sector in recent months and Exxon announced it was contesting Chevron’s acquisition of Hess, which is going to arbitration, contributing to share price volatility. Brent and WTI oil prices rose by 1.9% and 6.0%, ending the month at $87/bbl and $84/bbl respectively. The US Henry Hub natural gas price fell by 10.3% during the month to end at $1.76/mmbtu.
Within the energy transition theme, a number of large clean power utility companies have held a capital markets days in recent months and during March NextEra Energy announced increased investment in renewable power and electricity grids. These capex commitments provide strong support to the view that renewable energy installations may continue to see an acceleration over the coming years.
All data points in US dollar terms unless otherwise specified. Commodity price moves sourced from Thomson Reuters Datastream.
For more information on BlackRock Energy and Resources Income Trust and how to access the opportunities presented by the energy and resources markets, please visit www.blackrock.com/uk/beri
