In terms of assets held, investment style or structure, "investment trusts work best when they provide investors with something they can't readily access elsewhere", says Simon Elliott of Wins Investment Trusts. He believes Ecofin Water & Power Opportunities (LSE:ECWO) fits the bill on all three counts.
Run by Bernard Lambilliotte, the firm invests globally in water, electric power and gas distribution businesses, which are as close to recession-proof as you can get. But what's really exciting Ecofin Fund Management which, with $4.5bn in its portfolios, is one of the largest specialist utility players is a coming sea change. Ecofin believes the world is in the early stages of a boom in spending on electricity and gas infrastructure that could reverse years of underinvestment as demand for power soars. All of which should mean high energy prices and healthy earnings growth for the sector.
At the current price of 174p, ordinary shares in ECWO yield 2.9% and trade at a discount to net asset value of 11.5%. Gearing is 27.4%. The portfolio is invested roughly 50% in Britain and Europe, and 27% in America. The managers are looking to raise exposure to the Brazil, Russia, India and China, although they are well aware of the higher regulatory risks this could entail. The fund has returned some 93% in the last three years, against an 18% return from the FTSE All-Share index over the same period. If that global infrastructure view comes good, the next three years should be pretty rosy too.
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Ecofin Water & Power Opportunities top ten holdings
Name of holding - % of assets
Electric Power Development - 6.0%
ITC Holdings Corp - 5.8%
FPL Group - 3.9%
EDF - 3.8%
Poweo - 3.8%
Distrigaz - 3.4%
Suez - 3.3%
Exelon - 3.1%
Iberdrola Renovables - 3.0%
British Energy - 3.0%
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