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.
When you invest, your money is at risk because the value of investments, and any income from them, can go down as well as up and you could get back less than you invested. The past performance of an investment is not a guide to how it will perform in the future. Because there are many different types of investment risk and investors have different attitudes to risk, we are not able to categorise our investments as having a specific level of risk. We would therefore strongly recommend that if you do not have professional experience in matters relating to investments, you should speak with a financial adviser before making an investment decision.
Premier Miton Investors is not authorised to provide investment advice or tax advice. Before making an investment decision, it is also important that you read the key information document and pre-investment disclosure document which are available in the literature section of the website, by contacting a financial adviser or by getting in touch with us directly. See ‘Contact us’ for more information or if you are unsure.