Nick Britton of the Association of Investment Companies (AIC) writes;

Labour’s much anticipated election victory was greeted with zen-like serenity by the markets, but attention has quickly turned to how successful the new government might be in its plans to “kickstart UK growth” – the first of Sir Keir Starmer’s five missions.

Everyone seems to agree that five years of relative political stability will be a good thing, especially in a more politically volatile world. In a note released early on Friday morning, the analyst Jefferies caught the optimistic mood, stating that “in the next few years, the UK may look a relatively stable political entity, which together with regulatory reform could raise the attractiveness of UK assets”.

Jefferies adds that Labour’s policies could be particularly supportive for housebuilders, because of planning reform, and utilities, due to investment in grid infrastructure. Investment in the grid is certainly among the key asks of managers in the AIC renewable energy infrastructure sector, along with an end to “flip-flopping” on energy policy.

Labour’s second mission is to make Britain a “clean energy superpower”. Investment trusts are well placed to help.

Chris Morgan of International Public Partnerships says: “Investment trusts allow for stability and predictability for both service providers and investors, while also creating a reliable avenue for long-term investments.”

Phil Kent, Investment Adviser to GCP Infrastructure Investments, said: “Investment trusts should play a fundamental role: they are a well-established structure that provide investors of all types – from institutional to retail – with liquidity in the secondary markets, whilst the investor’s risk and return can be exposed to illiquid underlying infrastructure assets."‍

Ed Hunt, Fund Manager at HICL Infrastructure, said: “Investment trusts can play a key role in the financing and development of new infrastructure, as their success is naturally aligned with delivering positive outcomes for society. They have long-term investment goals and targets with time horizons in line with the infrastructure projects they invest in, which far outstrip the understandably shorter-term governmental mindset. The success of an infrastructure investment trust is inextricably linked with the successful delivery of projects and positive outcomes for the communities that the assets serve. This alignment of interests and ringfencing of capital for the entire duration of a project ensures the delivery of critical infrastructure and services to a high standard regardless of economic or political cycles.”‍

All of the managers quoted and others can be accessed via the VT RM Alternative Income fund recommended by EXE Capital Management. Many of the underlying investments are currently trading at significant discounts which provides investors with great opportunity.

To learn more, please contact Bertie Scott-Hopkins at EXE Capital Management on 01285 283 800.

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Thoughts of the author taken from Nick Britton's, 'Spotlight' article of July 2024

The views are those of the author only. The above does not constitute a recommendation to buy the fund and advice should be sought from your financial advisor as to the appropriateness of this fund in your portfolio. The value of investments can fall as well as rise.

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