Ecofin Global Utilities and Infrastructure Trust (EGL) announced its annual results for the year ended 30 September 2024. The company delivered an impressive NAV total return of 25.9%.
This performance exceeded those of the comparable global infrastructure and utilities sector indices, as well as general equity benchmarks such as the MSCI World index and was achieved despite a significant headwind from sterling strength. The company’s share price total return was 24.8%. Four quarterly dividends were paid during the period totalling 8.10p per share. Due to the board’s confidence, the quarterly dividend will be increased by 3.7% to 2.125p per share (8.5p per share per annum) from February 2025 payment. Despite the impressive returns, the company’s discount remained excessive, at 16.6% at the time of publishing.
Discussing the performance, chairman David Simpson noted:
“Performance was positive across the utility, environmental services and transportation infrastructure portfolio segments during the year, and especially strong in the US. Stock selection was beneficial. The portfolio was well positioned for the recovery in share valuations of utilities and the resurgence in interest in nuclear power. With heightened market volatility, our investment manager also found opportunities to manage position sizes profitably. A modest level of gearing boosted underlying returns.”
Regarding the outlook for the trust, he adds:
“Since 30 September (to 10 December), the company’s NAV and share price have decreased by 4.0% and 2.0% respectively. October and November brought upward pressure on long-bond yields despite reductions in shorter-term interest rates across the developed economies. This provides a headwind for the share prices of companies, such as those in our sector, which have significant dividend yields. Diversification of our portfolio and our flexible mandate will help us protect the downside and capture new opportunities as they arise.
“Companies in the portfolio are reporting strong earnings and good opportunities for growth while valuations in our universe continue to be attractive. Electricity demand is rising steadily with a continuing shift towards decarbonised generation while transport and water infrastructure is also benefiting from rising demand and the need for capital investment. The portfolio is positioned to benefit from these long-term trends as electricity generators diversify their generation fleets, transmission grids are modernised, and distribution systems adapt to changing customer needs. The need for investment gives water & waste services and transportation infrastructure strong pricing power and platforms for growth while also providing attractive dividend yields”
Investment manager and management fee
As of 1 October 2024, RWC Asset Management LLP has acquired the material business interests of the company’s fund manager, Ecofin, and retained the investment team. Redwheel is a UK-based specialist investment manager with c. £18bn in assets under management, including Temple Bar Investment Trust. The Ecofin team’s strategy and investment process remain unchanged.
From 1 October, a lower management fee also came into effect, as previously announced. The fee is now 0.9% p.a. on the first £200m of NAV, 0.75% above £200m and up to £400m, and 0.6% thereafter. This delivers future savings to shareholders.
EGL : Utilities shine for Ecofin Global Utilities and Infrastructure, driving banner year
