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Why China's utilities are 'exciting'

by Sean Butters Sep 02, 2016 at 07:00

UK utilities don't have an exciting reputation among investors but in China it's a different story, says James Smith, manager of Premier Energy & Water (PEW) investment trust.

This small fund invests in utilities across the world for the income they offer (its ordinary shares currently yield 4.8%) and capital (its portfolio has grown 50% in three years).

In this video interview, Smith explains that utilities are attractive because they offer a blend of regulated businesses, whose returns are predictable, and unregulated businesses, where there is more risk but greater potential for growth.

A fifth of the investment trust's assets are invested in China where a government drive to reduce coal consumption and clean up the environment is boosting companies involved in renewable energy, gas distribution and waste treatment.

Premier Energy & Water is a split capital investment trust with two share classes:

  • zero dividend shares that were issued at 100p and aim to be worth 125.7p when the trust winds up in 2020 but do not pay dividends (current price 112.5p);
  • ordinary income shares that do pay dividends and will return any capital growth left over once the 'zeros' have been paid off (current price 165.5p).
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Comments  (1)

  • JohnR: 

    Since early/mid 2015 I've seen this plummet to -40% - then topped up - since topping up it's recovered all that back and more.

    Not for those of a nervous disposition this one.

    16:03 on 02 September 2016

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