Wealth Manager - the site for professional investment managers

Register to get unlimited access to 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
9/10 in Equity - Global (High UK) (Performance over 3 years) Average Total Return: 22.77%
Citywire TV
Play Picton: the UK property hotspots for rental income

Picton: the UK property hotspots for rental income

Picton Property Income CEO Michael Morris reveals how he is planning to ride the ‘ripple effect’ as UK economic growth spills out from the capital across the country.

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

This week Brewin Dolphin's head of research talks to Mike Riddell, fund manager at Allianz Global Investors, about the forces driving bonds markets in a tumultuous week for markets.

Play Henderson's Hermon: how to be defensive in smaller caps

Henderson's Hermon: how to be defensive in smaller caps

Hermon, who manages the Henderson Smaller Companies trust, talks about he will tackle a 'challenging' 2016.

Your Business: Cover Star Club

Profile: 'what we are doing at Mosaic is Darwinian'

Profile: 'what we are doing at Mosaic is Darwinian'

The changes in financial services over the last few years may leave some destitute warns Marco Sambucci of Mosaic Money Management

Wealth Manager on Twitter