Seraphim Space Investment Trust — Several key holdings funded to break-even

Seraphim Space Investment Trust (LSE: SSIT)

Last close As at 18/05/2024

GBP0.66

−1.60 (−2.35%)

Market capitalisation

GBP158m

More on this equity

Research: Investment Companies

Seraphim Space Investment Trust — Several key holdings funded to break-even

Seraphim Space Investment Trust (SSIT) reported a modest 1.8% NAV total return (TR) in H124, as the positive impact from up rounds (most notably D-Orbit’s) was partly offset by downward fair value adjustments of some other holdings due to technical setbacks or operational underperformance. However, we note that fund-raising across the spacetech sector remained robust in CY23. Moreover, 82% of SSIT’s portfolio has a robust cash runway, with 60% fully funded based on the projections of its management, and 22% funded for 12 months or more from the end of 2023. Excluding the fully funded companies, the remaining portfolio has a fair value weighted average cash runway of 12 months, according to Seraphim Space.

Milosz Papst

Written by

Milosz Papst

Director, Financials

Investment Companies

Seraphim Space Investment Trust

Several key holdings funded to break-even

Investment trusts
Growth capital

10 April 2024

Price Ord

54.2p

Market cap

£128.6m

NAV

£224.3m

NAV per share*

94.57p

Share discount to NAV

42.7%

*As at end-December 2023.

Yield

0.0%

Shares in issue

237.2m

Code Ord/ISIN

SSIT/GB00BKPG0138

Primary exchange

LSE

AIC sector

Capital Growth

SSIT’s financial year end

30 June

52-week high/low

62.4p

26.1p

96.5p

91.8p

Gearing

Cash at end-December 2023

£26.8m

Fund objective

Seraphim Space Investment Trust’s objective is to generate capital growth over the long term through investment in a diversified, international portfolio of predominantly early- and growth-stage unquoted spacetech businesses with the potential to dominate globally. Spacetech businesses rely on space-based connectivity or precision, navigation and timing signals, addressing a broad range of key applications.

Bull points

SSIT is expected to benefit from structural long-term tailwinds.

Downside protection from liquidity preference and anti-dilution clauses.

Good cash runway across most of the portfolio by value.

Bear points

Macroeconomic headwinds curbing venture capital deal activity and valuations.

Liquidity constraints could hamper new investments.

Early-stage companies that are yet to break even are inherently risky.

Analyst

Milosz Papst

+44 (0)20 3077 5700

Seraphim Space Investment Trust is a research client of Edison Investment Research Limited

Seraphim Space Investment Trust (SSIT) reported a modest 1.8% NAV total return (TR) in H124, as the positive impact from up rounds (most notably D-Orbit’s) was partly offset by downward fair value adjustments of some other holdings due to technical setbacks or operational underperformance. However, we note that fund-raising across the spacetech sector remained robust in CY23. Moreover, 82% of SSIT’s portfolio has a robust cash runway, with 60% fully funded based on the projections of its management, and 22% funded for 12 months or more from the end of 2023. Excluding the fully funded companies, the remaining portfolio has a fair value weighted average cash runway of 12 months, according to Seraphim Space.

Around 60% of portfolio by value is funded through to cash flow break-even

Source: Seraphim Space Investment Trust data

Spacetech’s lift-off moment may be now

Commercial space technology (spacetech) is gathering pace, driven by a massive decline in the cost of manufacturing and putting satellites into orbit. This is coupled with growing demand for Earth observation from space in end-markets like defence, climate change and insurance. Further drivers on the demand side include, among others, connectivity and mobility. A wide range of investors (including sovereign wealth funds and private equity investors) have recognised the industry’s potential and have recently made forays into spacetech, with total venture and growth investments of US$6.8bn in 2023 (broadly stable versus 2022), according to the Seraphim Space Index.

SSIT’s portfolio gradually maturing

SSIT offers a rare opportunity to invest in a portfolio exclusively composed of early and growth-stage spacetech businesses (with c 97.5% of the portfolio value now in private companies), representing a viable alternative to ETFs focused on listed large-cap companies with only partial exposure to the theme. Several of its largest holdings have experienced good commercial traction recently, including ICEYE (SSIT’s largest holding, making up 20% of the portfolio), which has recently become EBITDA positive. Once IPO activity rebounds, this could provide SSIT’s major holdings the opportunity to list (though this seems more likely in CY25 rather than this year). SSIT’s diverse portfolio is now available at a wide discount to NAV.

Slightly positive NAV TR in H124

SSIT posted a 1.8% NAV TR in H124 (to end-December 2023), with unrealised net fair value gains of £4.6m and a small FX gain of £0.2m. A positive impact came from some of the recently closed funding rounds, most notably the €100m first close of a Series C funding round in January 2024 completed by D-Orbit (14.4% of SSIT’s end-December 2023 NAV), which was revalued upwards by 50% (by £10.8m to £32.2m in the case of SSIT’s stake). The company recently successfully launched its 12th and 13th ION Satellite Carrier orbital transfer missions.

Positive revaluations on the back of up rounds were partly offset by fair value reductions across some of the other holdings due to technical setbacks (Satellite Vu, 4.9% of end-December 2023 NAV) or underperformance (eg Altitude Angel and Xona Space Systems). Satellite Vu’s first satellite, which was successfully commissioned and entered commercial operations last year, faced a failure after six months in operation. As a result, the company will be unable to provide its services until the next satellite is successfully deployed into orbit (which it expects around Q125). The company will receive the full payout from its insurance policy. Still, the fair value of this holding in SSIT’s portfolio was reduced by 25% (or by £3.7m) to £11.0m. The net fair value reduction outside of SSIT’s top 10 holdings was a minor c £0.4m in H124.

SSIT’s NAV TR was also assisted by the NAV-accretive buyback (£1m spent in H124 to buy 2.2m shares or 0.9% of total shares in issue before the buyback announcement), which added £0.44 per share (or c 0.5%) to the company’s NAV per share.

Exhibit 1: Attribution analysis of SSIT’s NAV per share TR in H124 (to end-December 2023)

Source: Seraphim Space Investment Trust data, Edison Investment Research

SSIT’s private portfolio valued at around 1.2x cost

At end-December 2023, SSIT’s entire portfolio was valued at 1.01x cost. We note that this indicator is somewhat distorted by the negative impact from three portfolio companies that were listed via special purpose acquisition company (SPAC) mergers in 2021: AST SpaceMobile, Arqit Quantum and Spire Global. These companies subsequently experienced a significant de-rating since listing (see our previous note for details), which was common among SPAC mergers formed at that time.

The fair value of SSIT’s listed holdings stood at 13.2% of cost, broadly unchanged versus end-June 2023. Most of the negative impact materialised before H124, with more recent weakness limited to Arqit Quantum. Meanwhile, Spire Global performed well (its share price was up c 90% between end-June and end-December 2023, and a further 57% post reporting date). AST SpaceMobile secured c US$200m in funding in January 2024, including US$155m in equity funding, led by Google and AT&T. Its share price increased c 28% between end-June and end-December 2023, but subsequently fell significantly to date.

SSIT’s private companies (representing 97.5% of the £198.0m total portfolio fair value at end-December 2023) were valued at 121.5% of cost (vs 119.2% at end-June 2023), with only two out of the top 10 holdings (the latter making up 85% of its portfolio fair value) valued below cost (see Exhibit 2).

Exhibit 2: Multiple on invested capital* of SSIT’s top 10 holdings at end-December 2023

Source: Seraphim Space Investment Trust data. Note: *Defined as the remaining unrealised fair value divided by the revised cost of investment after accounting for partial realisations.

Exhibit 3: Summary of SSIT’s portfolio at end-December 2023

Company name

Subsector

Long-term TAM* in US$bn

Fair value
(£m)

% of NAV

ICEYE

Platform/Earth observation

10+

45.4

20.2%

D-Orbit

Launch/in-orbit services

1-5

32.2

14.4%

ALL.SPACE

Downlink/ground terminals

10+

23.9

10.7%

HawkEye 360

Platform/Earth observation

10+

21.1

9.4%

LeoLabs

Product/data platforms

1–5

13.1

5.8%

Satellite Vu

Platform/Earth observation

1–5

11.0

4.9%

Astroscale

Beyond Earth/in-orbit services

1–5

9.8

4.4%

PlanetWatchers

Analyse/data analytics

5–10

4.8

2.1%

Tomorrow.io

Platform/data platforms

30+

3.9

1.8%

QuadSAT

Downlink/communications

1–5

3.9

1.7%

Top 10

-

169.1

75.4%

Other investments

-

28.8

12.8%

Total portfolio value

-

198.0

88.2%

Cash

-

26.8

11.9%

Performance fee provision

-

0.0

-

Net current assets/(liabilities)

-

(0.4)

(0.2%)

NAV

-

224.3

100%

Source: Seraphim Space Investment Trust data. Note: *TAM, long-term total addressable market estimated by Seraphim Space.

Follow-on investments and selective new deals in H124

Given the difficult venture capital (VC) market environment, SSIT prioritised cash preservation and the support of its existing portfolio companies over extensive new investments. As a result, the company invested £5.7m in H124, of which £2.5m was deployed into three new investments and £3.3m into three follow-on transactions. SSIT’s new investments include Skylo, a telecommunication services provider developing a solution for standards-based ‘device-to-device’ satellite connectivity, enabling connectivity of mobile phones with the Android operating system, as well as enterprise IoT endpoints, to legacy geostationary satellites when they are outside of terrestrial coverage (‘always-on’ connectivity). SSIT invested £1.6m in Skylo’s US$37m Series A funding round led by Intel Capital and Innovation Endeavours. Skylo’s management believes that this should take the company to cash flow break-even. SSIT deployed a further £0.9m in two new undisclosed early-stage investments.

With respect to follow-on transactions, SSIT deployed a further £2.8m in a recent funding round of ALL.SPACE (10.7% of SSIT’s end-December 2023 NAV), which is developing antennas capable of connecting to any satellite in any constellation and orbit. The company recently signed a large, non-dilutive contract with a US defence customer amounting to more than US$10m. SSIT also made follow-on investments into two early-stage businesses amounting to c £0.5m.

The company’s liquid resources stood at £26.8m (or 12% of NAV) at end-December 2023. The majority of these resources will be used to support existing companies in upcoming funding rounds, and some capital will be deployed into further new investments. SSIT’s board will continue to monitor the company’s share price performance and discount to NAV (see Exhibit 4), but does not intend to initiate further buybacks at the moment.

Exhibit 4: Discount to NAV over the last 12 months (%) – SSIT versus peers

Source: LSEG, Seraphim Space Investment Trust data. Note: Peers include Molten Ventures, IP Group, Augmentum Fintech, Chrysalis Investments, Schroder British Opportunities and Schroder UK Public Private Trust.

Spacetech fund-raising remains resilient

SSIT highlighted that its private holdings continue to see solid growth in revenue and bookings, driven mostly by the demand associated with global security and climate change/sustainability. The spacetech industry continues to benefit from strong secular tailwinds (as discussed in our previous note) and data from Seraphim Space indicates that the sector has outperformed the broad VC market in terms of investment activity, which for spacetech businesses reached US$6.8bn in CY23 and was stable versus 2022 (see Exhibit 5), compared to a 35% decline in the broader VC market.

Exhibit 5: VC/growth capital investments in the global spacetech sector

Source: Seraphim Space Index

SSIT’s portfolio companies raised more than US$185m in total between 1 July and 31 December 2023 (versus more than US$130m in between 1 July and 31 December 2022). SSIT participated in most of these funding rounds, and while it accepted a certain modest level of dilution in selected cases, this did not have any major impact on the implied value of SSIT’s holdings. Eight SSIT companies successfully completed funding rounds in the period (including two from its top 10 list: HawkEye 360 and Tomorrow.io), of which six were with participation (or were led) by new external investors. Fund-raisings completed in H124 include one up round, as well as two flat rounds and three down rounds. The down rounds included two cases where the lower valuation was driven by underperformance versus previous expectations and one instance of a significant funding round closing modestly below the previous round carried out at the peak of the market in 2021. The three down rounds did not have any significant impact on SSIT’s NAV, partly thanks to the downside protection from liquidation preferences, which provide a prioritised return ahead of other share classes.

Seraphim Space has recently seen a recovery in growth-stage funding rounds across the market, which it believes bodes well for activity in CY24. It highlighted that, while some of its more mature companies aspire to go public, their management teams are mindful of the current tough IPO environment. Therefore, they are now focusing on scaling revenues and moving towards profitability ahead of potential listings (which are more likely in CY25).

60% of portfolio funded to cash flow break-even

SSIT’s portfolio companies remain well-funded overall, as seven companies making up 60% of its portfolio by fair value (five of which are in SSIT’s top 10 holdings) are already funded through to their cash flow break-even point based on the projections of their respective management teams (see front page exhibit). These companies may still decide to raise further capital to fuel growth or M&A activity to add organic revenue or new strategic capabilities. An example of M&A activity across SSIT’s broader portfolio includes HawkEye 360, which used some of the proceeds from its recent US$68m Series D-1 funding round to acquire RF Solutions, a provider of secure, precise, geospatial intelligence, from Maxar Intelligence. ICEYE, SSIT’s largest holding at end-December 2023, making up c 20% of portfolio value, now operates a constellation of 34 satellites and is EBITDA positive.

In addition to the seven companies that are funded to break-even, a further 16 holdings (representing 22% of portfolio value) are funded to end-December 2024 or later. Given that a typical VC funding cycle is 12 to 18 months, SSIT’s portfolio also includes companies with a cash runway of less than 12 months (c 18% of portfolio value). However, SSIT remains confident that these holdings will be able to close their respective funding rounds soon.

Appendix

Exhibit 6: SSIT’s discrete performance versus selected indices in total return, sterling terms (%)

12 months ending

SSIT’s NAV

SSIT’s share price

MSCI World Index

MSCI World Aerospace & Defense index

31/12/22

(11.4)

(64.0)

(7.4)

27.6

31/12/23

2.0

(23.9)

17.4

9.5

Source: LSEG, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Seraphim Space Investment Trust and prepared and issued by Edison, in consideration of a fee payable by Seraphim Space Investment Trust. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Seraphim Space Investment Trust and prepared and issued by Edison, in consideration of a fee payable by Seraphim Space Investment Trust. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Seraphim Space Investment Trust

View All

Latest from the Investment Companies sector

View All Investment Companies content

Research: Investment Companies

Utilico Emerging Markets Trust — Quality of UEM’s assets is underappreciated

Utilico Emerging Markets Trust’s (UEM’s) manager Charles Jillings, at specialist investor ICM, is very excited about the prospects for the trust’s investee companies. He believes that investors underappreciate the quality of these businesses and the teams that manage them. Jillings travels extensively, along with deputy portfolio managers Jacqueline Broers and Jonathan Groocock, meeting with current portfolio and other firms and relevant organisations in emerging markets. They report first hand that companies in the fund are performing very well, with robust top-line growth and cost reductions leading to higher margins. Because of the nature of UEM’s holdings in infrastructure and utility assets, the fund has a consistently low beta. Successful stock selection has led to the trust’s NAV outperformance versus the MSCI Emerging Markets Index over the last one, three, five and 10 years – most notably over the last three years. Since inception in 2005, UEM’s NAV total return compounded at 9.5% per year.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free