Complete your registration today for a chance to win £50 John Lewis vouchers in our weekly draw Enter now
Fund Profile


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Hipgnosis Songs. 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.

A new version of this profile is available. View Latest

Hipgnosis Songs Fund (SONG) currently has net assets of c. £700m, and aims to achieve income and capital growth by owning songwriters’ music royalties. In particular, the manager targets songs expected to be beneficiaries of the global rise of music streaming.

SONG now owns 54 catalogues, comprised of multiple writers, performers and genres. In total, the portfolio has over 13,000 songs, featuring 1,810 number-one hits (in at least one country). 49 have been awarded a Grammy. At current valuations, the portfolio is generating gross income of c. 6.7%.

The manager hopes to grow both the capital value and income from the portfolio in a number of ways. A secular tailwind is provided by the growth in global streaming, which is showing no signs of slowing. Additionally, the 2018 US Copyright Royalty Board ruling will increase the US royalty pot by 44% by 2022.

Manager-led initiatives include having a dedicated resource behind each song the trust owns, ensuring that revenues are maximised. Efficiencies in collecting revenue are expected as the portfolio administration is transitioned to Kobalt Music over the next two to three years. Kobalt is the preferred administrator, which claims to be able to recover 20% more income on a like-for-like basis relative to other administrators.

Over the past year, the portfolio’s earnings have covered this year’s 5p dividend two times over. The manager seems optimistic for the near-term prospects for income generation, and the board has reiterated its dividend target.

Analyst's View

We think the uncorrelated nature of the NAV and the high income the portfolio provides are key attractions of SONG. The next year or so will see more tangible evidence of the portfolio performance, which on its own could help reassure investors about this relatively unknown asset class.

Recent corporate activity in the wider music-publishing sector suggests that SONG’s historical valuation multiple of 13.9x (and current valuation of 15x) compares favourably to corporate valuations elsewhere. With the report and accounts due to be published next month, we hope more granularity on the portfolio will be provided, and further illustrate SONG’s unique proposition.

Further potential upside comes in the form of the independent valuer’s discount rate, which has so far stayed static since IPO. Within the renewable-energy infrastructure universe discount rates have come in significantly, driving NAVs upwards. Whilst SONG might not follow suit, there is certainly potential given the 9% discount rate currently used.

Market sentiment knocked SONG’s share price; in rating terms it therefore has some way to go to recover the previous double-digit premium. However, on a yield of 4.4% the dividend is attractive and differentiated. With the potential tailwinds from the industry trends and management initiatives, the current discount might be viewed as an opportunity.

The uncorrelated returns potential, and the fact that this is the only UK-listed share giving exposure to music royalties, means we think that SONG deserves a premium rating again.

bull bear
Attractive yield, with prospect of income and capital growth Unfamiliar asset class, with no direct comparators listed (although Spotify, Warner Music and Vivendi have some of the same dynamics)
NAV returns likely to be uncorrelated with equity and bond markets Investment strategy requires temporary acquisition of high levels of gearing
Opportunity for capital growth from industry trends as well as active management Possibility that the current trend of rising royalty payments will reverse
Continue to Portfolio

Fund History

19 Apr 2024 SONG announcement on recommended cash offer
The board of Hipgnosis Songs Fund agrees sale of whole portfolio…
07 Mar 2024 Flash update: Hipgnosis Songs
Update following most recent announcement...
03 Jan 2024 Probably better asking an octopus
Our investment trust experts uncurl a tentacle each and choose their ‘top picks’ for 2024…
25 Oct 2023 We’re going to need a bigger boat...
We argue corporate activity is picking up, making the investment trust sector an exciting place to invest…
23 Aug 2023 Halfway there…investing on a prayer
We provide an update on our picks for 2023 and see which analysts' prayers are being answered…
03 May 2023 Alt-right or alt-wrong?
Infrastructure and renewables have moved from alternative to mainstream assets - what could be next..?
23 Feb 2023 The real book
SONG’s share price remains at a price that we think is an overreaction to legitimate worries…
04 Jan 2023 Here we go again
We review our ‘top picks’ for what was a wild year and place our bets for the year ahead – which doesn’t look much calmer…
30 Nov 2022 Cry havoc!
Lessons from a year in which an already troubled world was savaged by the dogs of war...
27 Oct 2022 Fund Analysis
The SONG portfolio’s significance is not reflected by its wide discount to NAV…
25 Aug 2022 O Brave New World
We ask whether private assets remain attractive as interest rates rise…
13 Jul 2022 Ready player one
We wonder where, if anywhere, should investors look for returns after a tumultuous first half of the year…
06 Jul 2022 A game of two halves
In the second article of our series on the AIC Flexible Investment sector we see how performance has stacked up during two years when markets were poles apart...
18 Feb 2022 Fund Analysis
SONG has continued to deliver, yet now trades at an attractive discount...
12 Jan 2022 Bargain hunt
We survey the discount opportunities in the market and update on the performance of our Discounted Opportunities Portfolio…
30 Dec 2021 Great expectations
As the last of the mince pies wilts in the fridge, topped with a generous helping of stilton, the Kepler Trust Intelligence team stick a finger in the air and point toward their top picks for the year ahead…
21 Jul 2021 Every which way but loose
We break down the AIC Flexible sector into more useful segments…
20 Jul 2021 Fund Analysis
2020 has proven SONG’s resilience, with potential for a re-rating…
19 May 2021 The complexity premium
We examine the idea that extra returns can be obtained from buying investments which are perceived to be more complex by most investors...
31 Mar 2021 Fund Analysis
With additional portfolio disclosures recently made, SONG looks set to benefit from tailwinds in the music industry…
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…
30 Nov 2020 Flash update: Hipgnosis Songs Fund
SONG NAV moves up, and continues to offer potential income and capital growth…
25 Jun 2020 Fund Analysis
SONG owns and manages songwriter royalties, aiming to deliver a high income and capital growth...
09 Oct 2019 Bond proxy?
As a replacement or complement for longer duration bonds, listed alternative income funds look an interesting, well… alternative..
25 Sep 2019 One-stop shop: how multi-asset trusts offer superior diversification
Investment trusts are particular suited to this mode of investing. We examine their advantages over open-ended funds and highlight the trusts which do it well…
19 Sep 2019 Fund Analysis
SONG owns and manages songwriter royalties, aiming to deliver a high income and capital growth...
View all

Welcome to Kepler Trust Intelligence

Please enter a valid email address
Please enter a valid password
Please enter a valid email address
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
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
Please enter a company name
Please enter a location name
Please choose an option
Please enter a platform
Please choose an option
Please enter a trust
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
Please select an option
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
Please enter your first name
Please enter your last name
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
Please enter a valid password
Please enter a valid password
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.