Assisted by a marked depreciation of sterling and no currency hedging, Premier Energy and Water Trust’s (PEW’s) NAV has risen by 26.1% since the UK’s EU referendum. PEW has little exposure to UK companies, a geared structure and many holdings that the manager believes are materially undervalued. The share price has not kept pace with recent NAV growth, allowing a discount to emerge. In addition, PEW’s 4.9% yield (based on its forecast dividend of 8p) could rise from here as PEW has reached its full year revenue targets just half way through its year.
PEW invests in equity and equity-related securities of companies operating in the utilities and infrastructure sectors, with the twin objectives of achieving high income and long-term capital growth from its portfolio. Since the change of management and stock selection in June 2012, the portfolio has greater emphasis on emerging markets; smaller companies and special situations; and lower weightings to traditional, developed market, utility companies.