Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Greencoat UK Wind. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
A new version of this profile is available. View Latest
Overview

Greencoat UK Wind (UKW) was the first renewable energy infrastructure trust to launch, and its subsequent growth has led to significant benefits for investors. The tiered fee structure and economies of scale have led to the OCF reducing significantly over time. At the same time, the trust can now consider much larger sized investments, which in themselves offer economies of scale and therefore potentially higher returns than might otherwise be the case. Finally, its scale enables a dedicated management team to optimise the assets and enhance performance.

This shows up in the NAV performance of UKW, which continues to perform strongly relative to peers and the UK equity market. UKW remains the only renewable energy infrastructure fund to explicitly state that its aim is to grow dividends in line with inflation.

The UK Government’s ten-point plan for a Green Industrial Revolution to achieve carbon neutrality by 2050 requires a significant ramp up of offshore wind generation to 40GW, which would represent a quadrupling of current capacity. Offshore wind farms are typically significantly larger than onshore, and UKW’s increased scale will allow it to invest in this asset class. Notwithstanding a competitive market, UKW has a significant pipeline of assets that it has committed to buy which should give reassurance on the immediate future in terms of capital deployment.

UKW’s target dividend for the current year is 7.18p, meaning the shares offer a prospective dividend yield of 5.4% on the current share price, which we think compares well with income sources elsewhere.

Kepler View

In our view 2020 shows the strength and resilience of UKW’s relatively simple model. A combination of the high and rising dividend, and the NAV growth has led to strong total returns since IPO and over the past five years. Indeed, UKW remains amongst the best performing of the renewable energy infrastructure funds since it launched in 2013.

At the same time, the NAV has been strong and uncorrelated with volatility in the equity market. The share price has had a beta and volatility of less than half of the FTSE All Share over five years (Source: Morningstar), and so we believe that over the long term UKW’s trading history illustrates that it is an attractive complement to equity portfolios.

Of late, dividend cover has been lower than the managers’ budgeted expectation of 1.6-1.7x. For the current year, it is early days yet. However, we understand that the team are optimistic that despite wind speeds being lower than usual in Q1 2021, higher wholesale energy prices mean that dividend cover should be in line with budget.

Notwithstanding a competitive market, UKW has a significant pipeline of assets that it has committed to buy which gives reassurance on the immediate future in terms of capital deployment. The current premium to NAV of 11% (Source: JPMorgan Cazenove) is in-line with the five-year average for the trust. In our view UKW justifies a premium rating to the peer group average, and so the current level could provide an attractive entry point for a trust offering a covered dividend linked to inflation, and an OCF projected to be below 1%.

BULL
BEAR
High dividend yield, well covered by cash
Premium to NAV (although currently below peer group average)
Continued commitment to RPI-linked dividend growth
Gearing exacerbates underlying asset valuation movements
Uncorrelated assets, and committed pipeline of investments
Valuations based on long-term assumptions which may (or may not) prove optimistic
Continue to Portfolio
2022 Kepler Alternative Income Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for alternative income... Find out more

Fund History

11 May 2022 Catch a tiger by the tail
As inflation bites harder than it has for decades, we consider the best ways for investors to hang on to their capital...
29 Apr 2022 Flash update: Greencoat UK Wind
Reporting performance for the first quarter of 2022, UKW has announced a NAV which represents a 13.2% total return for the 3 months to 31/03/2022...
22 Mar 2022 Fund Analysis
UKW is in a strong position to capture the benefit of current high energy prices…
09 Mar 2022 Private markets: A closer look at infrastructure and renewables
We examine the £27bn listed Infrastructure and Renewable Energy Infrastructure sectors…
01 Dec 2021 How to protect your portfolio from inflation
We highlight trusts which could appeal in an environment where 'transient' inflation is here to stay...
03 Nov 2021 Don't fear the reaper
With market direction hard to call, we consider the case for taking a long-term view in the investment trust sector…
10 Jun 2021 Green is good!
2021 will see billions dedicated to sustainable initiatives, which brings with it a host of possible investment opportunities...
02 Jun 2021 Fund Analysis
UKW’s size and robust model means we think it deserves to trade at a premium to peers…
12 May 2021 Riders on the storm
We look at the yields in the alternatives space and how they have been affected by the pandemic…
09 Mar 2021 Fund Analysis
2020 has proved UKW’s resilience, which continues to target an inflation linked dividend…
24 Feb 2021 Dire Straits or Money for Nothing?
With the sector having seen discounts narrow like never before – our analysts debate whether a premium is a price worth paying…
17 Feb 2021 Jungle Fever
Soaring interest in ESG has exciting implications, but risks pushing some stocks to distinctly unsustainable valuations...
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
26 Nov 2020 Fund Analysis
2020 has proved UKW’s resilience, but is now better value in terms of premium...
15 Oct 2020 Nice guys finish first
ESG has moved from hippy pipe-dream to corporate mainstream, but what is it really and where do we see opportunities?
09 Sep 2020 Time to switch horses?
We look at what returns are likely from equity markets in the coming decade and identify which alternatives could offer similar or greater returns for lower levels of risk…
09 Jul 2020 The next big thing: two mega-trends that everyone should own
Tech has beaten almost everything hands down – but nothing lasts forever. Where else should investors be looking for secular growth themes?
23 Apr 2020 Sucker punch
Two of our analysts debate the merits of equity income and alternative income trusts at this point in time...
12 Mar 2020 The importance of buying earners*
Our analysis shows that the impact of dividend contributions on long term returns is anything but trivial...
04 Mar 2020 Fund Analysis
Recent de-rating, but prospects appear undimmed…
16 Oct 2019 Life on Mars: could inflation take us back to the '70s?
We discuss two potential catalysts for inflation - and the assets that could offer a hedge against it...
09 Oct 2019 Bond proxy?
As a replacement or complement for longer duration bonds, listed alternative income funds look an interesting, well… alternative..
19 Sep 2019 Rebels no more...
Climate change and sustainability is now mainstream - we launch ESG analysis into all of our fund research…
19 Sep 2019 Fund Analysis
UKW invests in operating wind farms, aiming to provide an RPI-linked dividend and preserve the real value of the NAV…
06 Mar 2019 Stairway to heaven
Our research shows that reinvesting the income generated by alternative assets could add a significant boost to long-term portfolio performance…
28 Feb 2019 Fund Analysis
Greencoat UK Wind invests in operating wind farms, aiming to provide an RPI-linked dividend and preserve the real value of the NAV...
30 Jan 2019 The Annuity Portfolio
We reveal our investment trust picks for a high income ...
24 Dec 2018 Why did the chicken cross the road?
Because he was so bored of reading newspapers devoted entirely to Brexit he was hoping he’d be hit by a truck.
25 Jul 2018 The Evergreen Annuity Portfolio
Our Evergreen Annuity Portfolio was set up to provide a high income, rising at least in line with inflation...
19 Jul 2018 A new dawn
As the sun sets on fossil fuels, we examine the opportunities for investors in the burgeoning listed renewable infrastructure sector...
26 Mar 2018 Electric dreams
The global shift toward electrification could spark many opportunities…
21 Mar 2018 Fund Analysis
Aims to provide investors with an annual dividend that increases in line with RPI inflation while preserving the real value of the NAV
24 Jan 2018 Seeing the wood for the trees...
Our model portfolio designed as an annuity alternative is struggling to keep pace with inflation, we review the latest from the constituents…
20 Nov 2017 Under pressure
Our model portfolio designed as an annuity alternative is coping so far, but may struggle to keep pace with inflation at this rate…
20 Nov 2017 Fund Analysis
A differentiated trust generating both income and capital growth from operating UK wind farms
25 Jan 2017 Should I stay or should I go?
That's exactly the question we are asking ourselves as the story at BlackRock Income Strategies unfolds...
16 Nov 2016 Weathering well
The Evergreen Annuity Portfolio enters its second year with a solid performance from most of its constituents...
16 Nov 2016 Fund Analysis
An update of the Greencoat UK Wind investment trust including share price performance, discount, dividend, premium, asset allocation and gearing analysis...
13 Oct 2015 The Evergreen Annuity Portfolio
Five 'all season' investments which will produce a sustained high income without eating into capital...
13 Oct 2015 Fund Analysis
View all

Welcome to Kepler Trust Intelligence

Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority.
Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority. To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.