BlackRock Energy and Resources Income Trust plc

About this investment trust

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

The Company aims to achieve an annual dividend target and, over the long term, capital growth by investing primarily in securities of companies operating in the mining and energy sectors.

Why choose it?

Mining and energy companies lie at the heart of the global economy. Without them, countries cannot grow and develop. Mining companies provide everything from materials to build wind turbines to lithium for electric cars. They play an important role in the long-term de-carbonisation of the global economy. Energy companies power our cars, our homes and drive economic development. On the sustainable energy side, the path to a lower carbon global economy is forecast to disrupt many industries and business models. However, this evolution is also expected to create remarkable opportunities. Investment in a specialist trust gives targeted exposure to these important companies, as it is positioned to capture such industry shifts and reap the benefits from this transition.

Suited to…

Investors looking for a specialist energy and mining trust that provides long-term diversification of income and capital, geared to economic expansion. These companies can be volatile, so some tolerance for market uncertainty is important.

*e.g., renewable energy, energy efficiency, and clean transportation companies.

What are the risks?

• Capital at risk.The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
• Overseas investment will be affected by movements in currency exchange rates.
• 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.
• 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.
• Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.

Useful information

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Fees & Charges

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ESG Integration

The fund noted above does not commit to sustainable criteria nor does it have a sustainable investment objective.

BlackRock considers many investment risks in our processes. In order to seek the best risk-adjusted returns for our clients, we manage material risks and opportunities that could impact portfolios, including financially material Environmental, Social and/or Governance (ESG) data or information, where available. See our Firm Wide ESG Integration Statement for more information on this approach and fund documentation for how these material risks are considered within this product, where applicable.

Fund manager commentary

31 October 2024

Please note that the commentary below includes historic information on sector performance, commodity price performance and the Company’s NAV performance.

The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results.

The Company’s Net Asset Value (NAV) increased by 1.1% in October 2024 (in GBP terms).

Global equity markets fell during the month. US economic data pointed to stronger than expected growth with a higher number of jobs added in September 2024 and upward revisions to prior months. US inflation data as shown by core Consumer Price Index (CPI) also remained higher than expected. These led to US bond yields rising and reduced expectations around the scale and pace of US interest rate cuts. In Europe, the ECB reduced interest rates by a further 0.25% following lower growth, employment and inflation data. Positive sentiment from China’s boost from monetary stimulus announced last month eased with a lack of clarity over the potential for fiscal stimulus measures. Higher broader market valuation levels going into Q3 results, US election uncertainty, changes in interest rate expectations and elevated geopolitical risks have contributed to notable individual stock price reactions.

Within energy, in recent months geopolitical risk in the Middle East has contributed to oil price volatility. During October 2024, oil prices rose to $80 on the potential for risk of disruption to energy infrastructure, before falling back to end the month little changed. Brent and WTI oil prices rose by 1.2%, ending the month at $73/bbl and $70bbl respectively. The US Henry Hub natural gas price fell -7% during the month to end at $2.7/mmbtu, as gas producers continued to add back supply, which had previously been curtailed.

The mining sector had challenged performance in October as a lack of detail on China’s stimulus measures weighed on commodities. In the commodities space, iron ore (62% fe), copper and nickel fell by 7.3%, 3.3% and 10.5% respectively. The aluminium price held up better, down by just 0.7%, as supply was disrupted by port issues at Jamalco and as future supply looked set to be increasingly constrained by Alcoa announcing the curtailment of its Kwinana alumina refinery in Western Australia. In the precious metals space, gold and silver prices rose by 4.1% and 4.8% respectively, appearing to benefit from ‘safe-haven’ demand as a result of ongoing geopolitical tensions in the Middle East and the approaching U.S. presidential election. Additionally, we saw more technology hyperscalers indicating a preference for nuclear to power their artificial intelligence (AI) datacentres, which lifted sentiment on uranium and uranium miners.

Within the sustainable energy theme, the Internation Energy Agency (IEA) released its World Energy Outlook 2024 and Renewables 2024. IEA expect more than 5,500GW of new renewable energy capacity between 2024 and 2030. Solar is expected to account for c.80% of this new capacity due to growth in manufacturing capacity and a continuation of improving solar PV economics. The EU announced tariffs on China EV imports in addition to the existing 10%, ranging from an additional 17% to 35%.

Unless otherwise stated all data is sourced from BlackRock as at 31 October 2024. All data points in US Dollar terms unless otherwise specified.

Risk: Reference to the names of each company mentioned in this communication is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those companies.

Any opinions or forecasts represent an assessment of the market environment at a specific time and are not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research, investment advice or a recommendation.

Portfolio manager biographies

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Tom Holl is co-manager of the BlackRock Energy and Resources Income Trust plc and is a member of BlackRock's Natural Resources team. Tom is responsible for the nutrition strategy, the gold and mining sectors and co-manages a number of the team's gold and mining portfolios as well as income strategies. He moved to his current role in 2008, but his service with the firm dates back to 2006. Previously, Tom was a member of the Global Equity team and the Real Estate team. Tom has a degree, with honours in land economy.

Mark Hume is co-manager of the BlackRock Energy and Resources Income Trust plc and is a member of the Natural Resources team within the Fundamental Equity division of BlackRock's Active Equity Group. He is responsible for covering the energy and new energy sectors.

Prior to joining BlackRock in 2017, Mark was an energy portfolio manager at Colonial First State Global Asset Management. He had previously worked at Bank of America Merrill Lunch, Credit Suisse, JP Morgan and Wood Mackenzie as a senior equities analyst covering large-cap energy stocks. He holds a MEng in Petroleum Engineering from Heriot-Watt University, and a BSc in Mathematics from the University of Edinburgh.

Board of directors

All of the Directors are non-executive and are independent of the Investment Manager.

* Denotes Member of the Audit and Management Engagement Committee.

Mr Adrian Brown (Chairman) (appointed 10 December 2019) is a senior advisor for Apex Group. He was formerly an Investment Analyst and Corporate Finance Manager at Morgan Grenfell & Co before joining Pearson plc as a Corporate Resources Executive. In 1992 he joined Boots plc, holding a range of senior roles before returning to work in the financial services sector in 2006 as a Senior Portfolio Manager in the Equity / Multi-Asset Group at AllianceBernstein LP and subsequently at JPMorgan Asset Management, where he was a Managing Director and Client Portfolio Manager in the Global / International Equity Group from 2011 until his retirement in 2018. Mr Brown is also a trustee of the Boots plc pension scheme.

Mrs Carole Ferguson* (appointed 22 December 2021) is CEO of Carbon Transition Analytics and a Non-Executive Director of Henderson Far East Income Limited. She is also on the advisory board of WHEB Asset Management, an impact investor focused on the opportunities created by the transition to a low carbon and sustainable global economy, and was also formerly a Managing Director of Industry Tracker, a climate research house. Mrs Ferguson has extensive experience in the financial services sector in research, finance and sustainability. She began her career in fund management with BZW Investment Management, moving to work in equity derivatives with Swiss Bank Corporation, JP Morgan Securities and later with Jardine Fleming (Hong Kong) and Robert Fleming (London). Subsequently she was a senior member of the UK fund management team at SG Asset Management before moving to work as a mining analyst at SP Angel for four years. In 2017 she became Head of Investor Research at CDP, the charity that runs the global disclosure system for investors, companies, and others to manage their environmental impact.

Mr Andrew Robson* (appointed 8 December 2020) is a qualified chartered accountant with over 15 years of corporate finance experience, gained at Robert Fleming & Co Limited and SG Hambros. He has considerable experience as a finance director and as chairman of audit committees, including for a number of investment companies, and has a business advisory practice. He is currently a Non-Executive Director of abrdn New India Investment Trust plc. He was also a Non-Executive Director of AVI Global Trust plc (formerly British Empire Trust plc) until 2017, Shires Income plc until July 2020, JPMorgan Smaller Companies Investment Trust plc until November 2020 and Baillie Gifford China Growth Trust plc until 16 June 2023. Mr Robson has a degree in History from Trinity College, Cambridge.

Mrs Anne Marie Cannon* (appointed as Senior Independent Director 15 March 2024) has over 40 years experience in the energy industry and investment banking and is an experienced director holding executive and non-executive roles. She is currently Deputy Chair at Aker BP ASA and was formerly a Non-Executive Director of Harbour Energy plc, STV Group plc, Aker ASA and Aker Energy AS. In addition, she is a Senior Advisor in the Strategic Advisory business at PJT Partners. Mrs Cannon was previously a Senior Advisor at Morgan Stanley and a Director at Schroder Wagg and was an Executive Director on the boards of Hardy Oil & Gas plc and British Borneo plc. She has also held financial and commercial roles at Shell UK and Thomson North Sea. Mrs Cannon is a Fellow of the Energy Institute.