There are just three UK investment trusts covering this specialist segment of the energy market, which may seem surprising given the level of media coverage it invariably attracts. BlackRock New Energy has been with us for nearly a decade, and its performance has mirrored the changing fortunes of the renewables industry since the turn of the millennium.
Robin Batchelor has managed the trust's portfolio since inception – and given the flux within the sector, its no easy task. While it's true that the push towards viable alternative energy sources has certainly gathered momentum in recent years, the industry, it must be remembered, is still in early stage development, and all fledgling industries are inherently vulnerable to constrictions in credit lines. Valuations were driven down throughout much of 2008 and into the following year, especially for those companies overly reliant on credit for driving growth. There was increased consolidation within the industry, and conventional utilities snapped up whichever promising alternative energy companies that would fit neatly in with their business models.
BlackRock's performance during this period was predictably dire, and the 8.46 per cent rise in NAV over the past year has only partly mitigated 2008's steep decline. However, the trust has performed rather better over the long-haul: an annualised five-year return at just under 10 per cent has been attained despite the credit woes, and at 1.4 per cent, the TER is relatively modest.
Looking forward, the trust's performance is linked to a large degree on general energy prices. As prices rise for gas, petroleum and coal, the cost competitiveness of alternative energy sources improves. It is generally considered that energy costs will trend upwards as industrial demand increases in the world's developing economies. Environmental legislative changes are also underpinning the growth of the sector.
BLACKROCK NEW ENERGY | |||
---|---|---|---|
PRICE | 43.5p | NAV | 47.46p |
SIZE OF FUND | £125m | PRICE DISCOUNT TO NAV | 8.34% |
No OF HOLDINGS: | 67 | 1 YEAR PERFORMANCE | 9.43%* |
SET UP DATE | 23 Oct 00 | 3 YEAR PERFORMANCE | -9.53%* |
MANAGER START DATE | 23 Oct 00 | 5 YEAR PERFORMANCE | 9.81%* |
BETA | na | TOTAL EXPENSE RATIO | 1.40%* |
VOLATILITY 3-YEAR | 1.51%* | YIELD | nil |
TRACKING ERROR | na | GEARING | 100 |
SHARPE RATIO | -0.06* | MORE DETAILS | blackrock.co.uk |
Source: Datastream & *Morningstar
Top ten holdings (as at 30 Nov)
Holding | Percentage |
---|---|
American Superconductor | USA |
Archer Daniels Midland | USA |
FPL Group | USA |
GamesaCorp Technologica | Spain |
IberdrolaRenovables | Spain |
Itron | USA |
Johnson Matthey | UK |
Sasol | South Africa |
VestaWind Systems | Denmark |
WackerChemie | Germany |
Sector breakdown
Sector | Percentage |
---|---|
Renewable Energy | 54.3 |
Enabling Energy Technology | 21.4 |
Alternative Fuels | 13.6 |
Materials Technology | 5.8 |
Energy Storage | 2.3 |
Auto & On-site Generation | 0.8 |
Net current assets | 1.8 |