Premier Miton Global Renewables (PMGR), formerly Premier Global Infrastructure, announced annual results covering the period to 31 December 2020. The total assets total return, measuring the return on the portfolio including all income and costs, (including the costs associated with the ZDP refinancing of £0.41 million), was 16.5%. PMGR said that this performance was well ahead of the market indices it measures its performance by, including the FTSE global core infrastructure 50/50 index, which returned -6.1%.
Equity market hedging and contracted revenue streams drive performance
PMGR highlighted two factors driving the level of performance:
- During the market rout in the first quarter, the manager acted to limit losses by taking a short index futures position against the major markets to which the portfolio was exposed. This gave a cash profit, which was then re-invested into the market at a very attractive entry point, resulting in further gains. In total, equity market hedging gains in the year amounted to £2.89m.
- PMGR’s portfolio, being mainly exposed to contracted and regulated underlying revenue streams, was in reality not as exposed to the economic situation as either the market as a whole or those areas of infrastructure, such as transport and some of the more customer-exposed utilities, which are yet to see a meaningful recovery. As discussed in more detail below, the Manager took advantage of market movements in the first half to increase substantially the weighting to renewable energy investments. The renewables sector then recovered strongly during the second half of the year, leading to an improving portfolio value.
Gillian Nott OBE, PMGR’s chair, had this to say on the company’s outlook: “Despite the continuing difficult economic and health situation, we enter 2021 with some hope for another profitable year.
In the US, the Presidential election is now over. As predicted, President Trump refused to accept the outcome of the vote, but this has not had the negative market impact that had been feared. Further, it is expected that the Biden Presidency, particularly now that it has full control of Congress, will pursue policies that are in alignment with combatting global warming, which should be of benefit to the Trust’s portfolio.
In the United Kingdom, we now have what looks to be a final resolution to the drawn-out saga of Brexit. We hope that the scars of recent years can heal over time and the UK and Europe can move forward in a spirit of cooperation. The development of UK environmental regulation continues apace, not least with the ambitions highlighted in the Government’s ten-point environmental plan.
In Europe, all eyes will be on the carbon market, (where carbon pricing remains well below that of the UK). A continued further increase is necessary to achieve the EU Commission’s targets for carbon reduction, and this has the potential to be a positive dynamic for the portfolio.
China, as ever, receives a bad press for its environmental performance. However, the development of its renewable energy sector continues to be rapid, and with costs having fallen to grid parity, new development is not reliant on Government subsidy and intervention.
Much has been reported about valuations within the renewable energy sector. However, most of the portfolio’s investments do not feature particularly highly within renewable energy indices, and have therefore not been inflated by the large inflows into exchange-traded funds which track these indices.”
PMGR: Premier Miton Global Renewables reports results to recap an excellent year