Quality of UEM’s assets is underappreciated

London, UK, 10 April 2024

Edison issues review on Utilico Emerging Markets Trust (UEM): Quality of UEM’s assets is underappreciated

Utilico Emerging Markets Trust’s (UEM’s) manager Charles Jillings, at specialist investor ICM, is very excited about the prospects for the trust’s investee companies. He believes that investors underappreciate the quality of these businesses and the teams that manage them. Jillings travels extensively, along with deputy portfolio managers Jacqueline Broers and Jonathan Groocock, meeting with current portfolio and other firms and relevant organisations in emerging markets. They report first hand that companies in the fund are performing very well, with robust top-line growth and cost reductions leading to higher margins. Because of the nature of UEM’s holdings in infrastructure and utility assets, the fund has a consistently low beta. Successful stock selection has led to the trust’s NAV outperformance versus the MSCI Emerging Markets Index over the last one, three, five and 10 years – most notably over the last three years. Since inception in 2005, UEM’s NAV total return compounded at 9.5% per year.

Jillings believes that the trust’s portfolio is undervalued given that investee companies are generating sector-leading performances. More than 80% of investee companies pay a dividend. In an environment of wider-than-average industry discounts, now could be a good time to consider a high-quality, asset-backed portfolio with an attractive 3.8% covered yield.  

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