With a cloud hanging over emerging markets, and adverse sentiment overriding strong micro-economic fundamentals, Premier Global Infrastructure Trust (PGIT) had a testing 2018. However, it has made an excellent start in 2019.
In the first two months of the year, aided by the gearing provided by its zero dividend preference shares, PGIT has made 20.6% in NAV total return terms and 20.1% in share price total return terms. The MSCI World Utilities Index returned 3.1%. Earnings growth for the utilities sector has been solid, despite market volatility. Valuations are now modestly above their five-year averages, but markedly below their five-year highs, and there could be renewed interest as the economic cycle progresses and investors look for defensive exposure. PGIT continues to offer a strong yield, paid quarterly.
Geared global utilities and infrastructure exposure
PGIT invests in equity and equity-related securities of companies operating in the utilities and infrastructure sectors, with the twin objectives of achieving high income and long-term capital growth from its portfolio. The portfolio has a strong emphasis on emerging markets, smaller companies, special situations and lower weightings to traditional, developed-market utility companies. It is split into three distinct areas: income equities; growth equities; and yieldcos (asset owning companies set up to stream income to investors in a tax-efficient manner) and investment companies. Its zero dividend preference shares (ZDPs) provide a high level of gearing to its ordinary shares.
| wdt_ID | Year ended | Share price total return (%) | NAV total return (%) | MSCI World Utilities TR (%) | MSCI World TR (%) | MSCI UK TR (%) |
|---|---|---|---|---|---|---|
| 1 | 28/02/15 | 16.8 | 4.5 | 15.2 | 17.6 | 5.4 |
| 2 | 29/02/16 | (28.6) | (23.2) | 7.5 | (0.7) | (9.2) |
| 3 | 28/02/17 | 48.0 | 55.5 | 23.0 | 36.6 | 24.2 |
| 4 | 28/02/18 | (13.7) | (22.2) | (7.5) | 6.6 | 3.2 |
| 5 | 28/02/19 | (2.4) | 5.1 | 20.5 | 4.6 | 2.1 |