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Investing in Green Infrastructure Funds (ITs)

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
BusyBumbleBee
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Re: Investing in Green Infrastructure Funds (ITs)

#218893

Postby BusyBumbleBee » May 2nd, 2019, 10:05 am

PrefInvestor wrote:...Well just to re-inforce your point about these renewable ITs and their penchant for capital raising, UKW have just come out today announcing an open offer at 133p (yesterdays closing price was ~143 !). They reckon that's a 5% discount (more like 6.x% I think) and a 10% uplift on the last reported NAV, but see the RNS for full details ...
Needless to say the shares have dropped by about 2.5% this morning and will likely go lower. A little annoying as an existing holder but not a disaster, at least the dividends are good!

Yup: noticed this - and glad you beat me to reporting it - was having a leisurely breakfast etc

This is what normally happens with the Green Infrastructure share but it is a tad different with this one as the premium to NAV is quite high for the first tranche.

What might happen now is that others will follow this route with a general drop in prices.

If I was a holder of UKW (which I am not as the price was too high) I would have sold first thing this morning in the sure knowledge that I could buy them back - either in the offer or in the market at a lower price.

I might buy in the offer though

with kind regards - BBB

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Re: Investing in Green Infrastructure Funds (ITs)

#218909

Postby UncleEbenezer » May 2nd, 2019, 10:50 am

BusyBumbleBee wrote:What might happen now is that others will follow this route with a general drop in prices.

Why would this be a trend-setter? As has surely been discussed in this and related threads, the green infrastructure funds raise new funds pretty regularly. JLEN and TRIG have both done so within the last couple of months: respectively a placing and an open offer.

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Re: Investing in Green Infrastructure Funds (ITs)

#218918

Postby BusyBumbleBee » May 2nd, 2019, 11:11 am

UncleEbenezer wrote:Why would this be a trend-setter?

Sorry - what I meant to point out in the 'trend setter' bit was that the Premium to NAV has gone up in this one. But got interrupted by the arrival (welcome arrival) of my 3 year old granddaughter.

PrefInvestor
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Re: Investing in Green Infrastructure Funds (ITs)

#218943

Postby PrefInvestor » May 2nd, 2019, 12:15 pm

Hi Again BBB, Well I understand the logic behind your approach but not so sure that it be really worthwhile in practice, well for me anyway. UKW did a placing for institutional investors only at 127 back in February, I thought “well the price will drop to close to 127 and I can buy some more”. So I set a limit order to buy at about 128 (not being greedy !) but it never got below about 129 so in the end I never bought. Mind you that was shortly after the January dividend payment and the price was nowhere near as much of a discount as this one is by the sound of it. Anyway I wouldn’t bank on it getting much lower than 135 based on that experience and as it opened at 138.93 today you might be able to make a ~3p price improvement I guess.

Potentially a good opportunity to get on board though, the price recovered strongly after the February placing. Personally i expect it to return to the 140s soon enough.

ATB

Pref

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Re: Investing in Green Infrastructure Funds (ITs)

#218948

Postby PrefInvestor » May 2nd, 2019, 12:32 pm

PS Should get 133 if you apply for the offer though I guess.......

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Re: Investing in Green Infrastructure Funds (ITs)

#220583

Postby PrefInvestor » May 10th, 2019, 7:17 am

BusyBumbleBee wrote:This is what normally happens with the Green Infrastructure share but it is a tad different with this one as the premium to NAV is quite high for the first tranche.

What might happen now is that others will follow this route with a general drop in prices.

If I was a holder of UKW (which I am not as the price was too high) I would have sold first thing this morning in the sure knowledge that I could buy them back - either in the offer or in the market at a lower price.

I might buy in the offer though


Hi Again BBB, I see that Ian Cowie is taking a similar view to yourself that investing in green ITs at too high a price could prove to be a mistake, see citywire article “Ian Cowie: renewable energy funds may lose feel-good factor if you pay too much”.

I don’t think that’s my situation ATM (bought all mine at much lower levels) but it does potentially put a damper on buying more at these levels. Had been planning to pick up some more UKW in their upcoming offer at 133. Not quite so sure now.

As I anticipated the price seems to be holding up pretty well, even with going XD yesterday for 1.735p.

ATB

Pref

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Re: Investing in Green Infrastructure Funds (ITs)

#220601

Postby dspp » May 10th, 2019, 9:08 am

Another one to consider is Good Energy (AIM: GOOD) who are much the same as these ITs except that they are directly listed and also have a client-facing business.

Note that their peer rivals Ecotricity have a ?? 25% shareholding in Good Energy. This acts both as a floor and as a ceiling to their share price, and brings with it what I would term "Dale risk". Mind you Good Energy also have what I would term "Julia risk".

regards, dspp

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Re: Investing in Green Infrastructure Funds (ITs)

#220614

Postby BrummieDave » May 10th, 2019, 10:07 am

Ian Cowie's a journalist with several columns to produce every week. Selecting a subject that's 'of the moment' keeps the click count high and the advertisers who indirectly pay his salary happy. Taking a view counter to investors momentum will always solicit more readers comments, and this is also a metric I'm sure he and his employers monitor. On this subject, few of the comments seem to agree with his article (which may or may not be what he really thinks anyway).

I enjoy reading his articles at Citywire ITI and also The Sunday Times, but never get too carried away with the content.

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Re: Investing in Green Infrastructure Funds (ITs)

#220644

Postby PrefInvestor » May 10th, 2019, 12:07 pm

dspp wrote:Another one to consider is Good Energy (AIM: GOOD) who are much the same as these ITs except that they are directly listed and also have a client-facing business.
p


Hi dspp, I looked at these a while back as they were recommended to me as energy supplier / FIT provider by my Solar PV installer. However I checked out their customer service reviews on TrustPilot (which werent universally great) and employee reviews (which were worse - some disaffected employees maybe) AND their energy prices were MUCH higher. So I didnt go with them.

Looking at them as a renewable investment today I see that they only yield 0.7% according to my broker ?. As I dont invest in ANYTHING that doesnt pay 4.5%+ that puts them completely off the table for me (especially when you factor in my observations above). I dont do growth stocks and thats why I like these green renewable ITs so much as the yield is good with RPI increases built in a lot of the time.

ATB

Pref

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Re: Investing in Green Infrastructure Funds (ITs)

#220646

Postby PrefInvestor » May 10th, 2019, 12:20 pm

BrummieDave wrote:Ian Cowie's a journalist with several columns to produce every week. Selecting a subject that's 'of the moment' keeps the click count high and the advertisers who indirectly pay his salary happy. Taking a view counter to investors momentum will always solicit more readers comments, and this is also a metric I'm sure he and his employers monitor. On this subject, few of the comments seem to agree with his article (which may or may not be what he really thinks anyway).

I enjoy reading his articles at Citywire ITI and also The Sunday Times, but never get too carried away with the content.


Hi brummiedave, Yes I am well aware of the "journo effect". I dont know about you but everywhere I look I see to see articles from The Motley Fool (TMF). I dont even open these as it seems that one of their writers writes a positive article one day (cherry picking facts to suit) and the next day out comes a negative article from the TMF (from a different author expressing opposing views). Some might call this "information" I suppose, but I regard it just as "noise" and prefer to ignore it all.

The latest article I referenced caught my eye because it expressed many of the points that BBB had raised - rapid run up in prices, high premiums, frequent money raising plus expressed concern about the viability of same in the face of future energy pricing. Now I'm not taking all that as the gospel truth, actually personally with the increasing electrification of EVERYTHING together with Government commitments on what is to be paid for nuclear generated power, I think that power prices are likely to rise substantially in future years. But it gave me pause for thought, especially with the UKW issue due soon. I also thought BBB might be interested.

ATB

Pref

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Re: Investing in Green Infrastructure Funds (ITs)

#220649

Postby TheMotorcycleBoy » May 10th, 2019, 12:40 pm

dspp wrote:Another one to consider is Good Energy (AIM: GOOD) who are much the same as these ITs except that they are directly listed and also have a client-facing business.

Note that their peer rivals Ecotricity have a ?? 25% shareholding in Good Energy. This acts both as a floor and as a ceiling to their share price, and brings with it what I would term "Dale risk". Mind you Good Energy also have what I would term "Julia risk".

regards, dspp

What is "Julia risk?"

Matt

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Re: Investing in Green Infrastructure Funds (ITs)

#220651

Postby dspp » May 10th, 2019, 12:55 pm

PrefInvestor wrote:
dspp wrote:Another one to consider is Good Energy (AIM: GOOD) who are much the same as these ITs except that they are directly listed and also have a client-facing business.
p


Hi dspp, I looked at these a while back as they were recommended to me as energy supplier / FIT provider by my Solar PV installer. However I checked out their customer service reviews on TrustPilot (which werent universally great) and employee reviews (which were worse - some disaffected employees maybe) AND their energy prices were MUCH higher. So I didnt go with them.

Looking at them as a renewable investment today I see that they only yield 0.7% according to my broker ?. As I dont invest in ANYTHING that doesnt pay 4.5%+ that puts them completely off the table for me (especially when you factor in my observations above). I dont do growth stocks and thats why I like these green renewable ITs so much as the yield is good with RPI increases built in a lot of the time.

ATB

Pref


IMHO all renewables will be low yielders unless they are using debt to spice up the mix. And debt can cause things to blow up.

GOOD have managed to go from 100p to 140p in the last few months. But take a look at the 5yr chart ..... gulp.

I personally don't hold them and have avoided doing so for a whole variety of reasons. I'm just tossing it into the mix for those with an interest in the sector as really it is a different way of getting at the same underlying asset.

I do use them as a gas & electricity supplier, and I have found their customer service to be faultless. I am happy to pay their prices - a) I don't use much; b) my use nets off against my export so in any case I am ££ neutral approx; c) I want to support the development of renewables generation.

TheMotorcycleBoy wrote:What is "Julia risk?"

Matt


Julia Davenport and Dale Vince, the respective CEOs.

regards, dspp

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Re: Investing in Green Infrastructure Funds (ITs)

#220655

Postby PrefInvestor » May 10th, 2019, 1:23 pm

Hi Again dspp, Yes I’d like to support renewable energy too. Planning a switch from my current supplier soon, thinking of the likes of Bulb or perhaps Octopus Energy maybe. I thought Good Energy were very expensive myself.

ATB

Pref

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Re: Investing in Green Infrastructure Funds (ITs)

#222967

Postby TheMotorcycleBoy » May 19th, 2019, 1:15 pm

PrefInvestor wrote:Hi Again BBB, Well just to re-inforce your point about these renewable ITs and their penchant for capital raising, UKW have just come out today announcing an open offer at 133p (yesterdays closing price was ~143 !). They reckon thats a 5% discount (more like 6.x% I think) and a 10% uplift on the last reported NAV, but see the RNS for full details.

Needless to say the shares have dropped by about 2.5% this morning and will likely go lower. A little annoying as an existing holder but not a disaster, at least the dividends are good !.

I've been spending some time this weekend trying to figure out to purchase this month to put into our foli. So I've revisited this thread....so sorry I've been a bit late catching up, anyway here goes.

I eventually found the announcement of the new share issue:
https://www.investegate.co.uk/greencoat ... 00048665X/

and it looks to me like this explains the recent tailing off of the share price. I was preparing myself to setup a limit buy order for some UKW, however on doing so, (by the way I'm using iWeb as my online broker platform) I was confronted by alerts by iWeb that I should read the KID for this trust first
http://doc.morningstar.com/Document/7ec ... f3eb.msdoc

In this in document my attention is drawn to the trust's fees, i.e. 2.03% annual charge. Am I right to assume that anyone buying UKW regardless of their platform is exposed to these fees? In other words, if I listen to a UKW presentation or a video clip e.g.

https://www.youtube.com/watch?v=8u8WQBc9oN0

then if for example I here UKW describe their IRR as 7%-8% (just by way of example), then mine IRR for my holding is always this figure less 2.03%?

Sorry to seem a bit stupid here! But I just want to know exactly what I'm paying for.

thanks
Matt

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Re: Investing in Green Infrastructure Funds (ITs)

#222977

Postby Alaric » May 19th, 2019, 1:47 pm

TheMotorcycleBoy wrote:In this in document my attention is drawn to the trust's fees, i.e. 2.03% annual charge. Am I right to assume that anyone buying UKW regardless of their platform is exposed to these fees?


The EU or FSA's intervention into the marketing of ITs via the rules on PRIIPs left some anomalies. One of these is that interest costs of "gearing", in other words the costs of borrowing to invest are lumped in with expenses instead of being separately itemised. Gearing is an investment issue rather than a charges one really. So if an IT borrows 100 at an interest rate of 4% to invest in assets to yield 6% that boosts investment returns. Gearing magnifies losses when asset prices fall.

When they quote a rate of return it may well be after charges and interest, but read the small print and listen very carefully to podcasts.

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Re: Investing in Green Infrastructure Funds (ITs)

#222982

Postby TheMotorcycleBoy » May 19th, 2019, 2:35 pm

Alaric wrote:
TheMotorcycleBoy wrote:In this in document my attention is drawn to the trust's fees, i.e. 2.03% annual charge. Am I right to assume that anyone buying UKW regardless of their platform is exposed to these fees?


The EU or FSA's intervention into the marketing of ITs via the rules on PRIIPs left some anomalies. One of these is that interest costs of "gearing", in other words the costs of borrowing to invest are lumped in with expenses instead of being separately itemised. Gearing is an investment issue rather than a charges one really. So if an IT borrows 100 at an interest rate of 4% to invest in assets to yield 6% that boosts investment returns. Gearing magnifies losses when asset prices fall.

Thanks Alaric, I appreciate the deal with the leverage.

When they quote a rate of return it may well be after charges and interest, but read the small print and listen very carefully to podcasts.

Sure. I guess the 2.03% annual fee is internal to UKW. So all holders of UKW regardless of their broker will incur this.

Matt

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Re: Investing in Green Infrastructure Funds (ITs)

#223000

Postby TheMotorcycleBoy » May 19th, 2019, 5:07 pm

I've attempted to drill down further into the annual charges which Greencoat applies to the investors. I seem to be finding two conflicting sets of figures.

Firstly on reading some of bumpf on HL and II, for example:

https://www.hl.co.uk/shares/shares-sear ... ary-shares
https://www.ii.co.uk/investment-trusts/ ... nd/LSE:UKW

there the Annual OCF is stated as being either 1.13% - 1.14%.

However both of those sites have a hyperlink to the following identical KID (as does my iWeb investment platform)

https://api-prod.ii.co.uk/api/1/documen ... 5ef3eb.pdf

where is stated that the ongoing costs are 1.81% + 0.22% = 2.03%

This is a little bit confusing. I can't imagine that Greencoat themselves have fees wrong, neither do I imagine that both HL and II are incorrect. My only assumption is that, just considering HL, that HL themselves charge 1.13% on top of the 2.03% already added by Greencoat. Does that sound plausible?

thanks Matt

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Re: Investing in Green Infrastructure Funds (ITs)

#223020

Postby PrefInvestor » May 19th, 2019, 7:59 pm

Hi Matt,

Sounds like you are new to the world of “funds”, which for ease of explanation I will include mutual funds (Open Ended Funds OEICs and Unit Trusts (UTs), investment trusts (ITs) and exchange traded funds (ETFs). These funds typically comprise a fund management team who manage a range of underlying investments which in many cases are just the real world shares that I’m sure that you are familiar with. The fund management teams incur costs in various areas eg they have transaction costs to buy and sell the shares, their own staff costs and of course they want to make a profit so they charge you something to invest in the fund. The charges made to cover these costs for a long time were extremely opaque and very high in some cases. There have been various efforts in the form of reviews aimed at standardising and reducing the charges. None have been completely successful. The most recent attempt was made by the EU with something called MIFID 2 which forced all fund managers to produce a KID (Key Information Document) that gives full details of the charge as well as an assessment of the risk of the investment (7 being very risky, 1 being not risky at all). Unfortunately fund managers typically do not have a standardised methodology for producing their KIDs and the general prevailing view is that they cannot be trusted to give a fair assessment of the charges. However all fund factsheets should include an OCF (Ongoing Charges Figure) that ought to be accurate for the fund concerned. Typically ETFs have the lowest OCFs, sort of 0.25-0.5%. Investment Trusts are typically sort of 1-1.5% in my experience, though some can be higher.

These charges affect the stock price of the investment and so will impact directly on the value of your investment, so they are important. They do not affect the dividends.

Good places to check the OCFs for a given investment are a) the investments factsheet or b) the AIC website here https://www.theaic.co.uk/.

Having looked at my brokers website I can confirm that the KID for UKW gives a figure of 2.03% whereas a UKW factsheet says 1.15% and the AIC web site says 1.13%. Personally I believe the 1.13% figure to be the correct one.

All very confusing I know.

ATB

Pref

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Re: Investing in Green Infrastructure Funds (ITs)

#223032

Postby MDW1954 » May 19th, 2019, 8:54 pm

The AIC have been running a campaign about poorly-designed KIDs (which I've written about, and interviewed them about) and I personally wouldn't place too much reliance on a KID right now. I think it will be sorted eventually, but right now, it's a mess.

Go on the AIC site for more info.

MDW1954

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Re: Investing in Green Infrastructure Funds (ITs)

#223038

Postby oldapple » May 19th, 2019, 9:18 pm

MMB

Below is a quote I got from my AJBell Youinvest with a theoretical £5000 purchase of UKW, to include charges. This would have been within an ISA. I’ve been following this and other renewable investment threads for some time now and was most interested in TRIG as they have some investment in N Ireland. I’m not sure why stamp duty is, or would be, charged in the event of a real purchase (Guernsey based?) I tried to scale up the quote to be more useful to you but perhaps because I don't actually have much more than £5000 in cash, the system wouldn't let me!


Fund Manager Ongoing charge : 1.14% £57.00
Transaction charges (buying and selling underlying investments over the year): 0.21%. £10.50
Total: 1.35% £67.50

PLUS. AJBell charges:

Dealing: 0.2%. £9.95 ( fixed charge Per deal I believe)
Stamp duty: 0.5%. £25.00
Custody charge 0.25%. £12.50
Total: 0.95%. £47.45

OVERALL TOTAL. 2.3%. £114.95

I have found 'ongoing charges' sometimes bear very little resemblance to the final bill when looking into all the charges listed and the ability to check them out first is most useful.

HTH


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