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Clearer picture, calmer nerves for renewables?

Biotech trusts top performance charts in February

James Carthew of QuotedData for Investment Week, 5 December 2022:

Shifting sentiment has led to a widening of discounts to net asset value across many parts of the investment companies’ industry.

One of the more unexpected deratings has occurred within the renewable energy infrastructure sector, despite two thirds of these funds generating double-digit NAV returns over the past 12 months.

Not that long ago all of the 22 funds in this sector were trading on premiums to asset value and most were issuing stock on a regular basis.

Now two – Aquila Energy Efficiency and Triple Point Energy Transition – languish on discounts of more than 25%.

Only five funds currently trade on a premium.

Two of those are the energy storage funds from Gore Street and Gresham House.

Their NAVs have been rising as they bring new energy storage facilities on stream. The third of these energy storage funds, Harmony Energy Income, is less well established having only IPOed just over a year ago, but we would expect it to shift to trading at a premium as its portfolio matures.

Another is JLEN Environmental Assets, which is distinguished from the rest of the peer group by the diversity of its portfolio, including significant exposure to areas such as anaerobic digestion.

Much is working in the sector’s favour, such as the global drive towards net zero, higher power prices, and rising inflation.

However, two main factors have undermined confidence in the sector – rising interest rates and uncertainty over UK government policy.

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