Now that the market has recovered from last spring’s panic attack, some interesting new investment trusts and exchange-traded funds (ETFs) have emerged. Starting with the former category, there are two welcome recent additions.
The first is the Triple Point Energy Efficiency Infrastructure Company (LSE: TEEC) trust, which has raised £100m and will invest in a diversified portfolio of energy-efficiency assets focusing on low carbon heat distribution, social housing retrofitting, industrial energy-efficiency and distributed generation (denoting technologies that generate electricity where it will be used, such as solar panels). The fund is targeting a total return of 7%-8% per annum with a target yearly dividend yield of 5.5%.
Building on infrastructure
The energy- efficiency market is essentially an extension of the existing infrastructure market, which includes the SDCL Energy Efficiency Trust (LSE: SEIT). It’s good news for income-hungry cautious investors. You get a solid range of income-producing assets based around some form of infrastructure. These assets are also, hopefully, helping make the planet a cleaner, greener place. Moreover, these underlying assets shouldn’t be too correlated to the wider economic cycle.
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SEIT has grown rapidly in recent years and now trades at a chunky premium to net asset value (NAV). I would expect the same to happen with the Triple Point fund. The managers are well regarded and have established a decent record in this sector over the past decade.
Another new fund is Home Reit (LSE: HOME), a real-estate investment trust that raised £240m in early October to put towards homes for the homeless. The Reit will be managed by Alvarium Fund Managers, a specialist in this area.
According to the manager, the “accommodation assets will be let or pre-let on very long (typically 20 to 30-year) inflation-linked leases to registered charities, housing associations, community interest companies and other regulated organisations [with] a proven operating track record in providing low-cost accommodation to the homeless, and which receive housing benefit or comparable support from local or central government [to that end].”
There is an explicit income target, in this case 5.5p per ordinary share, starting from 1 September 2021, “with the potential to grow through upward-only inflation-protected long-term lease agreements”. I think this fund will prove very popular and trade at a large premium to NAV too.
Investors should also keep an eye out for the November listing of the Round Hill Music Royalty Fund. We already have a highly successful music-royalties fund, London-listed Hipgnosis. Round Hill will provide some stiff competition as it has been operating in this market since 2010 and is in effect the seventh-largest music publishing business in the US. It has a phenomenal pipeline of 40 portfolios and is looking to raise over $350m.
Multi-asset plays
Some interesting new ETFs have emerged recently too. Perhaps the most important comes from BlackRock iShares, which has just launched three multi-asset environmental, social and governance (ESG) ETF portfolios. They boast low total expense ratios (TERs) of 0.25%. One is the BlackRock ESG Multi-Asset Conservative Portfolio UCITS ETF (LSE: MACG). Then there is the BlackRock ESG Multi-Asset Moderate Portfolio UCITS ETF (LSE: MAMG) and the BlackRock ESG Multi-Asset Growth Portfolio UCITS ETF (LSE: MAGG).
The first ETF offers a more conservative approach, with the portfolio comprising 80% bonds and 20% stocks while MAGG is the most adventurous, with 25% bonds and 75% stocks.
Note that BlackRock is clearly committed to its ESG funds. Its boss Larry Fink has even taken to writing letters to investors and businesses demanding they take more action on issues such as climate change.
I also like the look of a new ETF currently only available in Paris and on Germany’s Xetra exchange. It should be accessible via most UK brokers. The BNP Paribas Easy ECPI Global ESG Blue Economy UCITS ETF (Paris: BLUE) consists of 50 large-caps participating in what’s called the “blue economy”, which comprises coastal livelihoods, energy and resources, fisheries and seafood, pollution reduction and maritime transport.
The final ETF worth bringing to your attention is the Bitcoin Capital Active ETP (Zurich: BTCA). It is an actively-managed fund run by a specialist firm called Ficas, led by founder Ali Mizani Oskui, who has been trading bitcoin and other cryptocurrencies since 2013. The fund can move in and out of 15 different digital currencies and can even invest in boring old fiat money if need be.
I think this is a very appealing idea if you don’t feel very clued up on digital money. If we do go ever further down the path towards vast monetary expansion, alternatives to gold might become popular but the trick will be working out which digital currency makes most sense. This ETF isn’t listed yet in the UK but you should be able to access the Swiss exchange via most brokers.
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