The Company's conventional energy exposure performed strongly during March, although this was offset by weakness in the mining and energy transition components. Overall, the Company outperformed broader equity markets on both a NAV and share price basis, with the MSCI ACWI Net TR Index falling 5.3% in sterling terms over the month. Market performance was dominated by the escalating conflict involving the US, Israel and Iran, which effectively led to a closure of the Strait of Hormuz—a critical transit route for oil, liquefied natural gas (LNG) and other commodities. Commodity prices rose sharply as a result, with Brent crude, for example, increasing from US$73 per barrel to US$104 per barrel over the month. Against this backdrop, the Company's exposure to integrated oil & gas and exploration & production companies supported returns. Within the Company's energy transition allocation, energy efficiency and electrification holdings detracted from performance, while renewable energy exposure contributed positively. We have long argued that meeting the world's growing power demands will require an 'all of the above' energy solution encompassing conventional energy, renewables and nuclear. The renewed focus on energy security stemming from this conflict further reinforces that view. This comes at a time when global power demand is beginning to grow following a prolonged period of relative stability, in part driven by the expansion of artificial intelligence. We believe the Company's mandate leaves investors well positioned for this environment. Within the mining component, gold equity exposure was the largest detractor over the month. The conflict appeared to trigger a flight to liquidity and interest rate expectations increasing, which weighed on gold prices. For reference, the gold price fell 12.0% over the month. In our view, the factors driving this move are temporary, while the longer term structural tailwinds for gold remain firmly intact.
