With a cloud hanging over emerging markets, and adverse sentiment overriding strong micro-economic fundamentals, Premier Global Infrastructure Trust (PGIT) had a testing 2018. However, in the first two months of 2019 it has made an excellent start.

Aided by its geared capital structure, PGIT has returned 20.6% in NAV total return terms, closely matched by its share price total return of 20.1%. The MSCI World Utilities Index returned 3.1% in comparison. Earnings growth for the utilities sector has been solid, despite the market’s gyrations. Valuations are now modestly above their five-year averages, but markedly below their five-year highs, and there could be renewed interest as the cycle progresses and investors look for defensive exposure. In the meantime, PGIT continues to offer a strong yield, paid quarterly.

Geared global utilities and infrastructure exposure

PGIT invests in equity and equity-related securities of companies operating in the utilities and infrastructure sectors, with the twin objectives of achieving high income and long-term capital growth from its portfolio. The portfolio has a strong emphasis on emerging markets, smaller companies, special situations and lower weightings to traditional, developed-market utility companies. It is split into three
distinct areas: income equities; growth equities; and yieldcos and investment companies. Its zero dividend preference shares (ZDPs) provide a high level of gearing to its ordinary shares.