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Fund of the week: a premier utility performer
This investment trust concentrates on electricity generation and water-related stocks - and has risen 109% over five years.
As marketing gimmicks go, changing a fund's name is among the City's favourites.
But Premier Asset Management can be forgiven. Last year, the Premier Utilities investment trust switched its name to Premier Energy & Water, reflecting the fact that it now focuses on the following two areas: 60% of the portfolio is in electricity generation, 20% in water-related stocks. Although this hurt it badly in 2008, as electricity demand fell globally, in the long run the fund has done well, rising 109% over five years.
Kevin Scutt, who has more than 20 years of experience in the industry, manages the fund. He looks for "absolutely cheap" stocks: "we don't want to buy them just because they are cheap compared to the index", he says. Unlisted firms now make up 4% of the fund, although this can go up to 15%.
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Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
On the electricity front, India is one of the fund's favourites "the gap between supply and demand is increasing". Aim-listed Greenko is one of the companies trying to plug the hole.
The clean energy producer is "priced below book value on a per-plant basis and making returns of 20% a year", says Scutt. It produces of 100MW of electricity a year with plans to increase this to 400MW by 2012 and 1,000MW by 2015.
On the water side, demand for infrastructure to transport large volumes of water and clean it is driving demand in southeast Asia. Epure, a Singapore-listed stock, "sucking water from under the Sahara", looks good, he says.
The fund also has more traditional exposure to the market with utilities such as Aqua America in America and Guandong Investment, which has a monopoly on the water supply in Hong Kong, also in the portfolio.
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