Utilico Emerging Markets (UEM), the only emerging markets focused infrastructure fund listed in London, has convincingly passed the continuation vote it brought forward a year early as part of the series of shareholder-friendly initiatives announced last month.
A total of 97.6% of proxy votes received before today’s annual general meeting approved an amendment to the £453m infrastructure fund’s articles of association to hold the five-yearly continuation vote a year early.
The same proportion also voted to continue the 20-year-old investment trust that from launch up to 31 July generated a 441.2% shareholder return, beating the MSCI Emerging Markets index return of 345.9%.
Chair Mark Bridgeman said: “Following a further period of strong performance, the board is delighted with the overwhelming support that shareholders have shown in passing both resolutions today and looks forward to UEM continuing to build on its 20-year record of outperformance and its progressive dividend policy.”
The votes – which were also passed by a show of hands at the well-attended AGM in London’s West End – signal the start of a five-year performance measurement period that will see the company offer to buy back up to a quarter of its shares if it fails to beat the benchmark by July 2030.
The proposal for a conditional tender offer came with a commitment for the 3.7%-yielder to maintain a progressive dividend and to target a reduction in the discount – or gap – between its share price and net asset value of its investments to under 10%.
Given the discount remains at 12% this leaves the company with more work to do in terms of marketing and buying back unwanted shares.
Despite the presence of activist hedge fund Saba Capital, which holds a 5.7% stake and is thought to have pressed for these changes, this isn’t a situation where an investment trust looks doomed to fail its test and shrink by 25%.
Under fund managers Charles Jillings and Jacqueline Broers, UEM has outperformed the MSCI benchmark over three and five years. Underlying returns from the global portfolio of utilities and infrastructure providers have been 22.3% and 59.6% over those periods at 31 August.
As Bridgeman said, the changes are more about providing greater transparency and shareholder value.
Last month the trust extended its good run, adding 2.8% to net asset value (NAV) while the MSCI Emerging Markets index dipped 0.9% in sterling terms. That left the closed-end fund – with around 70 holdings spread mainly in Brazil, eastern Europe, Philippines, China, Vietnam and India – up 11.2% in the first five months of its financial year to 31 March 2026.
The duo – who work at ICM Investment Management – restored Copel, a Brazilian electricity company, to the trust’s top 30 after rebuilding the position to 1.4% of net assets.
Also in the past month wealth manager Rathbones has disclosed a 5% stake in UEM. City of London, a value investor that will also like the backstop provided by the tender offer and commitment to share buybacks, holds 14.7%, making it the largest shareholder.
UEM represents a 5% holding in UIL Limited (UTL), a £179m split capital investment trust that Jillings also runs. Its portfolio rose 7.1% last month helped by a 17.5% rally in Australian lender Resimac Group, its largest holding at 23.8% of net assets. The ordinary shares have a more mixed record, however, down 19.5% over three years and trading around 33% below NAV, an indication it could do with taking a leaf out of Utilico’s book.
