With a cloud hanging over emerging markets, and adverse sentiment overriding strong micro-economic fundamentals, Premier Global Infrastructure Trust (PGIT) had a testing 2018. However, it has made an excellent start in 2019.
Premier Global Infrastructure Trust – Quick out of the blocks in 2019
In the first two months of the year, aided by the gearing provided by its zero dividend preference shares, PGIT has made 20.6% in NAV total return terms and 20.1% in share price total return terms. The MSCI World Utilities Index returned 3.1%. Earnings growth for the utilities sector has been solid, despite market volatility. Valuations are now modestly above their five-year averages, but markedly below their five-year highs, and there could be renewed interest as the economic cycle progresses and investors look for defensive exposure. PGIT continues to offer a strong yield, paid quarterly.
Geared global utilities and infrastructure exposure
PGIT 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. The portfolio has a strong emphasis on emerging markets, smaller companies, special situations and lower weightings to traditional, developed-market utility companies. It is split into three distinct areas: income equities; growth equities; and yieldcos (asset owning companies set up to stream income to investors in a tax-efficient manner) and investment companies. Its zero dividend preference shares (ZDPs) provide a high level of gearing to its ordinary shares.