US Solar Fund (USF)

US Solar Fund (LON:USF) owns a mature portfolio of fully operational US solar plants and generates a stable income by fixing out the price it receives for power far into the future. USF is the only AIC trust to solely focus on the huge and growing US solar industry and is managed by New Energy Solar Manager (NESM) a specialist in the sector, who are backed by a board with extensive experience in the sector and related industries (see Management).

USF targets a yield of 5.5% on the IPO price, equivalent to 5.5 cents per share. This is, since the start of 2021, being achieved on an ongoing basis, with the portfolio becoming fully operational in November 2020. The manager is looking for future growth opportunities in the US utility scale solar market which may include battery storage and have $38m of investable cash plus $40m of undrawn debt facilities. Gearing is below target and slightly below that of the peer group, as we discuss in the Gearing section.

The trust’s portfolio is spread across four states in the US, as discussed under Portfolio, allowing for diversity of climate and weather systems, supporting steady power production. Prices are agreed with offtakers for the power via Power Purchase Agreements (PPAs), fixed out for a weighted average of 14.6 years at 30 September 2021. While there is some volatility for sterling investors via the currency, these two features should contribute to a steady, predictable income stream from a sector with bipartisan political support and a dramatic growth trajectory. USF yields 5.7% on the current share price with its shares trading on a small premium of 2.1% to NAV.