Wealth Manager - Essential news for investment professionals

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

James Burns: how Utilico EM is plumbing into emerging yield

James Burns: how Utilico EM is plumbing into emerging yield
One of the longest-standing themes in my fund of investment trusts has been that of power, infrastructure and energy.

Ecofin Water & Power Opportunities, Premier Energy & Water and Utilico Emerging Markets have been my selections to play out these themes. The one holding that has really stood out this year has been Utilico: emerging markets have struggled but it has posted strong performance.

The company was launched in 2005 and invests predominantly in infrastructure, utilities and related sectors. There is an emphasis on ports, toll roads and rail investments, as well as water and waste.

The approach has no style bias but manager Charles Jillings and his team target companies that display the characteristics of essential services or monopolies.

Most holdings boast strong management, are asset-backed, have good cash flows and offer good dividend yields.

Conviction calls

In terms of geography, Brazil has been a conviction call. This remains the case although it has reduced recently due to relatively poor performance.

I agree with the managers’ assessment that there are still some great opportunities there regardless of the broader issues.

Chinese exposure is almost entirely through Hong Kong and remains the biggest weight in the portfolio which, having visited the region in recent years, I am very comfortable with.

What also makes Utilico attractive is that it pays a dividend yield of around 3.5%, and I am very conscious about the important role that dividends can play to enhance returns for investors in my fund.

Unlike most other investment companies with a yield, Utilico can be bought at a discount to asset value.

The board has had to dip into its capital reserves to support the dividend for the past two years but Jillings expects that the dividend will be fully covered by earnings within a year or so.

Since its launch this vehicle has tended to lag in strong market rises but perform better in weaker times.

As ever for a fund manager, it is important to get a good and complimentary balance of stocks covering a theme or a sector in a fund, and Utilico, along with Ecofin and Premier, provide this for me.

James Burns manages the Smith & Williams multi-manager desk and runs the Smith & Williamson MM Global Investment Fund

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

James Burns
James Burns
6/7 in Equity - Global (High UK) (Performance over 3 years) Average Total Return: 29.71%
Citywire TV
Play Sarasin’s Boucher: why I like salmon with chocolate

Sarasin’s Boucher: why I like salmon with chocolate

Henry Boucher, manager of the £129 million Sarasin Food & Agriculture Opportunities fund, explains why he is gobbling up salmon and chocolate stocks.

Play Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Libby Ashby and leading wealth managers analyse what the Alibaba IPO hype means for Chinese equities, slowing growth of the UK economy and whether there’s anything left to play for in the European sovereign bond market.

Play Tesco, Japan and the rise of the central banker

Tesco, Japan and the rise of the central banker

 Libby Ashby and leading wealth managers scrutinise the food retail sector, Japan’s consumption tax hike and political risk in the markets.

Your Business: Cover Star Club

Veteran banker boosts Sanlam’s stockbroking team

Veteran banker boosts Sanlam’s stockbroking team

A veteran private banker has been recruited by Sanlam Private Investments to strengthen its advisory stockbroking team.

Wealth Manager on Twitter