Investments  

Launch Pad: Renewable energy fund

Fund manager Tritax has launched a renewable energy fund targeting average yearly returns of 15.6 per cent in its six-year duration.

The Tritax Renewable Energy Fund No.1 will invest in four individual 500 kilowatt wind turbine developments with the aim of a secure and inflation-proof income stream while focusing on capital preservation.

Henry Franklin, partner of Tritax, said development risk was assumed by the developer G2 Energy, with the majority of the development income secured by a 20-year retail price index-linked contract with the government under its feed-in tariff scheme.

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Mr Franklin said: “Now is the right time to exploit the long-term business potential for renewable energy as it moves from a niche to a more mainstream offering.”

Key features:

• Target average annual cash distribution of 15.6 per cent.

• Capital allowances of between 26.8 per cent a year and 22.9 per cent a year, dependent on tax criteria.

• Qualifies for inheritance tax business property relief and entrepreneurs’ relief for capital gains tax

• Exempt investors such as Sipps and charities can also receive tax-free income

IFA Verdict: John Ditchfield, managing partner of national advisory firm Barchester Green Investment, said: “The current legislative framework in the UK is advantageous to these types of investments with tax advantages. However they also bring with them small company risk, with no diversification. My experience of Tritax is pretty good but it’s an LLP, rather than an open-ended investment company or unit trust, which is a complex structure. Firms always boast about the potential returns but a fund such as this needs careful due diligence into the minutiae.”