Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by TRIG - Renewables Infrastructure Group. 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
Overview

TRIG aims to provide a sustainable dividend over the long term through investment in a range of different renewable energy technologies in the UK and Europe. In this regard TRIG is differentiated from the peer group as no other peers have a mandate which includes such a wide breadth of asset types and geographies.

Portfolio diversification helps to protect revenues from short-term changes in weather patterns, and also from political environments, power prices and tax regimes. Having a mandate for a diversified portfolio (up to 20% of which is outside of wind and solar) gives the managers plenty of flexibility to deploy capital. We understand that the managers see plenty of opportunity to continue to widen the types of assets that the company invests in as part of the global transition to achieve ‘net zero’. This gives TRIG the opportunity to further burnish its strong sustainability credentials.

TRIG has achieved a progressive dividend every year since listing. As we discuss in the Dividend section, despite the unique challenges that 2020 presented, dividend cover was 1.13x. Mindful of the uncertainties we are all living with and the desire to provide a sustainable long-term dividend, the board’s target dividend for 2021 is the same as that for 2020. At the current share price, TRIG yields 5.3%.

TRIG likely fits the bill for most sustainability investors because of what it invests in, but the team are not resting on their laurels. As illustrated in the company’s updated sustainability report (accessible here), TRIG is pushing to ensure sustainability encompasses more than just its portfolio assets – be that through operations, payment of dividends into the future or even its financing (see Gearing).

Analyst's View

TRIG has delivered NAV total returns of 8% per annum. In fact, it has significantly outperformed the FTSE All-Share Index on both a price and NAV total return basis since launch, but with lower volatility. It is now the largest company by market capitalisation in the sector, which continues to expand. The tiered management fee means that as it grows in the future, the benefits of scale reduce costs and mean that the OCF will reduce progressively. Over the past year, costs have been reduced by 4 basis points, and are now at a highly competitive 0.94%.

As regards ESG, in our view one of the most significant developments for investors is that manager InfraRed has introduced a new sustainability-reporting framework across the portfolio to measure performance against a wider base of sustainability KPIs (Key Performance Indicators). In our view this is important because it will allow investors to hold the managers and board to account, and enable year-on-year progress to be measured against TRIG’s four sustainability goals. TRIG is clearly putting ESG front and centre of all it is doing, and therefore warrants consideration by even the most discerning ESG investor.

TRIG’s shares currently trade at a premium of 13% to JPMorgan Cazenove’s estimated NAV, relative to the peer group’s weighted average of 10%. In our view, this premium reflects the market’s appreciation of the diversified nature of the underlying portfolio and cash flows.

BUll bear
A high yield of 5.3%, with the potential for NAV preservation from reinvestment of surplus cash High premium to NAV in absolute terms
Has a pure exposure to diversified assets, technologies and subsidy regimes which are uncorrelated to equity markets, and scores well on ESG matters
Dividend cover not as high as that of funds which are not amortising (paying down) debt
Debt being repaid (amortising) within each asset’s subsidy period
Valuations based on long-term assumptions which may prove optimistic over time
Continue to Portfolio
2021 Kepler Alternative Income Rated Fund

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

Fund History

24 Nov 2021 Holding back the tears
While the final text of COP26 fell short of what many had hoped for, the writing is on the wall for fossil fuels and, from an investment perspective, the age of sustainability has only just begun…
14 Jul 2021 Fund Analysis
TRIG is putting ESG considerations at the centre of everything it does…
10 Jun 2021 Green is good!
2021 will see billions dedicated to sustainable initiatives, which brings with it a host of possible investment opportunities...
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…
24 Feb 2021 Dire Straits or Money for Nothing?
As discounts reach historically narrow levels across the board – 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…
10 Dec 2020 Fund Analysis
TRIG’s diversified income and strong ESG credentials justify its premium rating…
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 seems to beat every other sector hands down – in both up and down markets – but nothing lasts forever. Where else should investors be looking for secular growth themes?
01 Jul 2020 Fund Analysis
TRIG continues to diversify its portfolio, and has reaffirmed its 2020 dividend target...
09 Oct 2019 Bond proxy?
As a replacement or complement for longer duration bonds, listed alternative income funds look an interesting, well… alternative..
09 Oct 2019 Fund Analysis
Seeks to provide investors with long-term, stable dividends from an increasingly diversified portfolio of renewable energy assets…
22 Mar 2019 Fund Analysis
Seeks to provide investors with long-term, stable dividends whilst preserving the capital value of its investment portfolio...
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…
15 Aug 2018 The income edge
Last year saw investment trusts soar in popularity among both retail investors and wealth managers. We examine why this has happened, as well as the structural advantages of investment trusts for income-hungry investors...
19 Jul 2018 Fund Analysis
The Renewables Infrastructure Group (TRIG) seeks to provide investors with long-term, stable dividends whilst preserving the capital value of its investment portfolio...
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...
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