The Fund recorded a 4.75% gain in May (C Accumulation GBP) and finished the month at a year-to-date high, returning 14.02% over five months (C Accumulation GBP). The long-dated cash flows characterising many of the holdings in the portfolio means the strategy is sensitive to movements in government bond yields. While yields in key jurisdictions proved highly volatile and spiked significantly mid-month, European and UK 10-year yields closed the period lower month-on-month. In the US, yields closed higher but far below their highs. Much of the Fund’s positive performance came towards the end of May as sharp reductions in yields provided a tailwind.  

Most UK-listed renewable energy generators performed well, with calendar Q1 NAV updates generally showing flat to modest uplifts in net asset values (this was evident for Greencoat UK Wind, Foresight Environmental Infrastructure, Foresight Solar, and The Renewables Infrastructure Group). Foresight Environmental Infrastructure (+14.5% total return in May) and The Renewables Infrastructure Group (+9.4%) were the two greatest contributors to performance, and both companies had additional catalysts. The former hosted a well-received Capital Markets Day, which showcased the company’s growth assets and highlighted progress in transitioning from development stage to ramp-up and associated de-risking. Management were keen to highlight their focus on crystallising value from these investments. The Renewables Infrastructure Group, meanwhile, published a strategic update which included a target for ~4% CAGR in distributable cash flow per share over five years to 2030, an acceleration in the pace of the existing share buyback programme, and investment in its internal investment pipeline – supported by £400m of asset disposals, which are progressing. In addition, an adjustment was made to the basis of fees, such that they will be based solely on market capitalisation (while the shares trades at a discount to NAV, this is a shareholder friendly move) – for context, fees payable for Q1 2026 would have been 19% lower under the new basis. 

Brookfield Renewables and XPLR Infrastructure were also strong positive contributors, with the former recovering sharply after an unexplainable sell-off at the end of April. The best individual performer was US Solar Fund (albeit a modest weighting in the portfolio and therefore ranked fifth in terms of overall contribution), which gained 32.1% (GBP-adj.) after announcing it had received a non-binding letter of intent in respect of a sale of its entire portfolio (41 operating assets). The indicative value of the potential transaction represented “a significant premium to the Company’s current market capitalisation”. The potential buyer has been granted an exclusivity period of 90 days to conduct necessary due diligence.

The Investment Manager notes that on 1^st June, Bluefield Solar announced it had received an offer from Drax Group to acquire the entire issued share capital of Bluefield Solar for 92.574p per share in cash – a material improvement on the prevailing share price and representing a single-digit discount to NAV. This news prompted further near-term positive momentum across the UK-listed renewables space.    

Although most positions contributed positively, it was not broad-based. Roughly one third of positions detracted from performance but notable share price declines were constrained to very small exposures within the portfolio (c.1% allocation or less), namely; Aquila European Renewables, Scatec Solar and Nibe Industrier. Aquila European Renewables, which is in a managed wind down, announced that there had been a breakdown in negotiations around the sale of portfolio assets, with the offeror – Aquila Capital – attempting to acquire a larger group of assets but at a “materially wider discount” to NAV. While disappointing news, it is encouraging to see the board push back rather than accept a poor deal for shareholders.

Several positions were reduced at the margins during the period, including Acciona Energias, Boralex, Foresight Environmental Infrastructure, Meridian Energy and XPLR Infrastructure. Boralex, which in the early stages of June has received both shareholder and court approval for its takeover by Brookfield and La Caisse, now represents a cash proxy within the Fund with very limited upside ahead of the completion of the deal - anticipated in Q4 2026.