Premier Global Infrastructure Trust PLC
Fund manager insight

29 February 2020

The spread of Coronavirus from China to the rest of the world became increasingly apparent in the final week of February, leading to a broad market sell off. The Federal Reserve reduced its targeted interest rates by 0.5% to 1.25% in response.

The Net Asset Value per ordinary share fell by 5.9% to 137.9p, slightly worse than the FTSE Global Core Infrastructure 50/50 TR Index (GBP adjusted) which lost 5.8%. However, in the context of the Trust’s geared structure, this was a satisfactory result, with the portfolio out-performing the infrastructure sector.

Losses in the portfolio were widespread. However, the two largest investments Atlantica Yield and Northland Power both managed positive share price movements, having made significant gains earlier this month on investor enthusiasm for renewable energy.

Most European and US holdings have now reported 2019 results (note that the UK holdings tend to have March year ends and will report later in the year). The results have been encouraging, with significant holdings Northland Power, Engie, and Fortum all posting particularly strong figures. Sanepar was also well ahead of expectation. One negative was Atlantica Yield, posting figures a little lower than expected on weaker renewable generation and currency effects. Chinese investments will report 2019 figures during March.

Sterling was weak in the month, falling by 2.9% against the US Dollar, and by 2.3% against the Euro. The partial currency hedge remains in place, effectively removing the gearing effect of the capital structure from currency movements. The UK Government is seemingly adopting a tough negotiating stance in its trade talks with the EU, which has resurrected the market’s Brexit related trade concerns.

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