Edison Investment Research Limited
London, UK, 18 September 2023
Utilico Emerging Markets Trust: Emerging market growth opportunities at a discount
Utilico Emerging Markets Trust (UEM) is managed by Charles Jillings, together with deputy portfolio managers Jacqueline Broers and Jonathan Groocock, at specialist investor ICM. Jillings is frustrated by the trust’s wide discount, which he believes does not accurately reflect UEM’s strong past performance and future growth prospects. The fund has a consistently low beta and has outperformed the MSCI Emerging Markets Index over the past one, three, five and 10 years due to successful stock selection. Jillings and his team are investing in the growth potential from four megatrends: energy transition, digital infra, global trade and social infra. They seek undervalued real assets with robust growth profiles, strong cash flow generation and attractive dividend yields. Since inception in 2005, UEM’s NAV has compounded at 9.3% per year.
Despite UEM’s favourable growth and performance attributes, the trust’s discount is persistently wider than the board’s desired maximum of 10%. It is also wider than its historical averages over the last one, three, five and 10 years, providing real scope for a higher valuation once investors become less risk averse in a more settled macroeconomic environment.
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