InvestmentsSep 5 2016

Fund Review: Premier Global Utilities Income

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ByNyree Stewart

The fund’s C accumulation share class has a risk-reward level of five out of seven with ongoing charges of 1.28 per cent.

Since June 30 2012, the fund has delivered a return of 75.5 per cent to August 8 2016, compared with the FTSE All-World Utilities index gain of 58.3 per cent and the IA Global Equity Income sector average of 59.5 per cent, rebased into sterling, data from FE Analytics shows.

According to Ms Long, the most significant contributors to the fund’s performance during the past four years have been its Chinese holdings, including China Everbright and China Power International, together with regional multi-utilities in Italy, such as Hera and Acea.

She adds: “Until recently, the main detractors from performance had been the fund’s Brazilian utilities, which suffered as a result of weakening economic conditions and a drought that curtailed the country’s hydroelectric power generation. So far in 2016, however, with an improved political situation and an end to the drought, the stocks have been among the fund’s best performers.”

Ms Long points out that currency has periodically been a headwind for the fund, which has generally been unhedged and with a minority of the fund’s holdings denominated in sterling. She notes: “Since the Brexit vote, this has clearly been a tailwind and, if it remains at current levels [or falls further], will continue to benefit both the fund’s capital and its income. Meanwhile, during periods of uncertainty, utilities can be one of the more reliable sectors.”