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Investment trust insider on Greencoat UK Wind

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Investment trust insider on Greencoat UK Wind – James Carthew: Renewables de-rating won’t last. Funds like UK Wind are too important

The end of the month sees a big milestone for the investment companies sector – Greencoat UK Wind (UKW), the first of the renewable energy infrastructure trusts, will be 10 years old. The initial launch raised £260m, helped by backing from both the Department for Business Innovation and Skills and SSE.

Today, this is a £15.7bn sector with 22 constituents. Notwithstanding the upcoming demise of Aquila Energy Efficiency (AEET) and the discount problem currently plaguing the sector, this has been a real success story.

UKW, the pioneer of the sector, remains its largest fund with a market value of £3.6bn, having delivered respectable growth in net asset value (NAV) and dividend growth since launch under the management team of Laurence Fumagalli and Stephen Lilley. The only big change has been the controlling stake in the original management company acquired by Schroders last year.

Last month, I highlighted the problem facing income investors hoping to at least preserve the value of their dividends in real terms. That was before UKW announced its results and stuck by its ambition to grow its dividend in line with RPI inflation. The 13.5% increase planned for the dividend over 2023 represents one of the largest dividend increases that we have seen from an income fund so far this year.

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