The Fund maintained positive momentum in May, recording a gain of 2.16% during the period (C Accumulation GBP) and marking four consecutive months of positive returns for the strategy.

Among the greatest positive contributors were three smaller allocations in the Fund, all of which have derated considerably in recent years – but continued to deliver attractive levels of income, nevertheless. Aquila European Renewables, US Solar and VH Global Energy Infrastructure reported total returns in May (GBP-adjusted) of +14.8%, 16.8%, and +26.2%, respectively. 

For Aquila and VH Global, the catalysts for the share price movements related to news flow around planned asset realisations and intentions to return capital to shareholders. Aquila announced it had sold its 18% interest in a Portuguese hydropower asset (in line with the company’s valuation for the asset as at 31^st December 2024) and provided an encouraging update on the ongoing process of realising the remainder of the company’s assets, which included a statement that it had “agreed non-binding Heads of Terms and entered into exclusivity with a preferred bidder for the proposed disposal of a portfolio of assets that represents a majority of the Company’s portfolio”. 

VH Global, meanwhile, announced a proposal to adopt an asset realisation strategy to sell the portfolio and return capital to shareholders. It is anticipated that shareholders should benefit from the managed wind down of these companies as asset disposals should be closer to NAV and significantly higher than prevailing share prices.

Three UK-listed solar companies, Bluefield Solar, Foresight Solar and NextEnergy Solar, were notably weak during the period; all having posted soft NAV updates for the first calendar quarter of 2025. However, all three have contributed well year-to-date, with the shares in each company having delivered a positive total return in excess of the Fund’s overall return for the same period. 

Harmony Energy Income, which has been the subject of a competitive bidding process, was the worst individual performer (-4.2% in May) as Drax stepped away from a planned auction process, which some market participants had hoped would drive the final takeover price higher. Drax’s decision not to proceed in the auction resulted in the shares retracing closer to the price level at which (the ultimately successful) bid from Foresight Group was pitched.

Despite the loss of a number of high-yielding names from the portfolio in recent months, owing largely to takeovers, the portfolio has continued to generate good levels of income to support distributions to unitholders of the Fund. The second quarter distribution will be declared at the end of June.