BlackRock Energy & Resources Income – targeting the heart of the global economy

BlackRock Energy and Resources Income (BERI) invests in energy, including energy transition, and mining stocks, with the goal of delivering income to shareholders. Manager Tom Holl presented at this week’s event, giving an interesting overview of a sector that has come into sharp focus over the last 12 months.

One interesting trend, perhaps to be expected, is that the trust’s sources of revenue has skewed dramatically towards dividends, reflecting the higher commodity prices we’ve seen since Russia invaded Ukraine. Close to 80% of the trust’s revenue derived from dividends in 2022, compared to the range of approximately 50% – 60% that it saw in the prior four years.

Tom then moved on to look at energy transition, noting that the theme is being driven by policymakers, a desire for green energy solutions among the public and the increasing cost competitiveness of renewables. Also notable here was some discussion of how the benefits of self-sufficiency have become more apparent since Russia’s invasion of Ukraine.

Next Tom moved on to talk about energy. The standout factors here were the mix of demand and underinvestment, as well as valuations. With regard to the first, demand remains strong but may be hard to meet given lower levels of capex in the sector. At the same time valuations for companies in the sector remain attractive.

Finally, Tom looked at mining companies, providing some background on performance. The main focus in this part of the talk was on how commodities are going to play a vital role in the move to renewables.
 

 

 

Disclaimer

This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.