Fund Research

Utilico Emerging Markets

Last update 06 September 2019

Material produced by Kepler Trust Intelligence should be considered as factual information only and not an indication as to the desirability or appropriateness of investing in the security discussed.

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Investment objective

To provide long-term total return by investing predominantly in infrastructure, utility and related sectors mainly in emerging markets

As at:

30/08/2019

Group/Investment

Utilico Emerging Markets

Ticker

UEM

Management Company

ICM

Manager Name

Charles Jillings; Duncan Saville;

Association of Investment Companies (AIC) Sector

Global Emerging Markets

12 Mo Yield

3.1%

Dividend Distribution Frequency

Quarterly

Latest Market Capitalisation

£531,373,761

Latest Net Gearing (Cum Fair)

11%

Latest Ongoing Charge Ex Perf Fee

1%

Turnover Ratio

23.3%

Shares Outstanding

228,057,408

(Discount)/ Premium (Cum Fair)

-12.5%

Daily Closing Price

233p

Source: Morningstar

Utilico Emerging Markets (UEM) offers a different set of exposures to the average emerging market fund, focusing on the infrastructure and utilities sectors and on Latin America rather than North Asia. The trust owns a portfolio of companies chosen for their strong positions in their industries, which should allow them to generate high shareholder returns over the long term, with an aim of harnessing the growth potential in the rise of the emerging markets middle classes.

The trust has performed strongly over the long term, with five year returns ahead of the index and peer group despite not being exposed to the fashionable, higher-growth sectors of information technology and consumer discretionary. The trust has tended to do better in down markets while making less than the market in rising markets, which is unsurprising given the bias to defensive sectors.

The more defensive sectors the trust invests in tend to pay higher dividends, and so the yield is significant, at 3.1%. However, the objective of the trust is to generate total returns, so income is not prioritised over capital returns. The dividend has been grown or held each year over the past decade, however.

The trust trades on a discount of 12.5%. This is tighter than the average for 2018, when emerging markets were out of favour, but wider than the five-year average of 10.8%. In 2018, UEM redomiciled to the UK from Bermuda, in an attempt to make the trust more attractive to investors and close the discount. The trust has also carried out regular buybacks when the discount widens into double figures.

The trust is managed by specialist fund manager ICM, and a team headed by Charles Jillings and Duncan Saville. The management team and directors have substantial shareholdings in the trust.

There is a performance fee, charged at 15% of the NAV total returns in excess of 8% (or the benchmark plus 2% when that is higher). There is a high watermark and the fee was last charged in 2017.

Thomas McMahon

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Fund History: Utilico Emerging Markets

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