The Fund made a positive start to 2026 and recorded a gain of 1.47% in January (C Accumulation GBP). The number of positive and negative contributors was broadly evenly split.

Yield-focused US renewable exposures performed well in January and accounted for much of the overall performance. HA Sustainable Infrastructure Capital, Clearway Energy Inc. and Brookfield Renewables Corp. recorded total returns (GBP-adj.) of 7.43%, 6.65% and 6.57%, respectively. HA Sustainable Infrastructure Capital was the greatest contributor to overall performance. Brookfield Renewables reported “record results” for 2025, signalled a positive outlook, and increased its Q1 distribution by 5%. CEO Connor Teskey stated: “Driven by the multi-decade trends of reindustrialisation and electrification, which have been amplified by ongoing data centre development, today’s robust energy demand growth requires development of ‘any and all’ forms of energy”. Brookfield’s global development pipeline (bolstered by last year’s acquisition of Neoen, in which the Fund was also invested) across baseload technologies and rapidly deployable solar and onshore wind projects should place the company in a strong strategic position to benefit from these dynamics.

The catalyst for Clearway, which reports full year results in February, was the announcement that it had signed Power Purchase Agreements with Google to supply 1.17GW of carbon-free energy to support the tech giant’s data centres in Missouri, Texas, and West Virginia representing a $2.4bn investment in energy infrastructure.

The quantum of demand for reliable power is providing a strong tailwind for the energy sector more broadly, but the speed at which renewables can be deployed is advantageous (compared with new build natural gas, for example). The need for energy generation capacity outweighs any remaining policy headwinds in the US, with considerable visibility afforded under the One Big Beautiful Bill Act, including clear safe-harbouring rules for clean energy tax credits. Utility-scale solar, onshore wind, and energy storage solutions are key segments that are likely to benefit from strong growth in 2026.

Although there was no obvious stock-specific news to drive the uplift, a significant positive contribution came from Foresight Environmental Assets, which gained 10.33% over the month and has a relatively high weighting within the portfolio. Similarly, with no specific news, the only notable detractor in January was Octopus Renewables Infrastructure, which lost 9.82% in value.

At the end of the month, the UK government announced its decision to adopt “proposal 1” in relation to its recent consultation regarding the basis of indexation for Renewable Obligation subsidies. This will see RO prices indexed to CPI from 2026, which essentially brings forward a shift that would have occurred from 2030. While the move will prove a detractor to future cash flow expectations, it was the least punitive option (bar no change) and companies affected had already published a range of anticipated sensitivities to the proposals put forward. Insomuch as the market had discounted a worst-case scenario, which was avoided, and now has clarity looking forward, there is potential for some relief rally among this cohort.

Holdings in HA Sustainable Infrastructure Capital, Clearway Energy Inc., Foresight Environmental Assets and Meridian Energy were all reduced during the period in order to manage position sizes following recent strong relative performance.