WAVERTON REAL ASSETS FUND: £300m fund is building block for portfolios
Investment fund Waverton Real Assets does not seek to shoot the proverbial investment lights out. It considers itself a steady eddie, delivering a respectable income and capital return through thick and thin.
It’s an investment formula that seems to be proving popular judging by the inflows into the fund. Launched in late 2018, the fund now has assets under its belt in excess of £300million and has provided investors with a respectable income – around four per cent a year with dividends paid quarterly for those who want them – and capital return.
Since launch 37 months ago, the fund has recorded overall returns (capital plus income) of around 19 per cent. Compared to the FTSE All-Share Index, it has delivered slightly inferior returns, but the journey has been a smoother one – not falling as far in March 2020 while not getting all the market’s upside.
The fund is managed by Luke Hyde-Smith, assisted by Matthew Parkinson. ‘We see it as a portfolio building block,’ says Hyde-Smith. ‘It provides investors with sources of income they would find difficult to obtain on their own, while trying to enhance the capital value of their investments.’
With 48 holdings, the sources of income are varied, but the emphasis is very much on property and infrastructure. Combined, these asset classes account for more than 60 per cent of the fund’s portfolio. Holdings are through listed investment trusts, individual stocks, exchange traded funds and actively managed funds.
Conventional commercial property funds – investing in a spread of retail, office and industrial buildings – do not feature in the portfolio. Hyde-Smith prefers holdings that are benefiting from the transformation in the way people shop.
It means the fund has key holdings in the likes of investment trust Urban Logistics that owns industrial units which tenants can use to manufacture and distribute goods in the last mile of the supply chain. Key tenants include Amazon, and logistics companies Culina and Unipart. The rental income the trust generates from its tenants fuels a dividend to shareholders such as Waverton in the order of four per cent.
Another big fund holding is Tritax Big Box, which rents out distribution centres to companies that include Amazon, Morrisons and Ocado. Another top 10 stake is in trust Supermarket Income, which owns stores that allow big supermarket firms to offer instore shopping, click-and-collect services, and last-mile online grocery fulfilment centres for home delivery – all under one roof.
‘It’s a super trust and a real success story,’ says Hyde-Smith. ‘It listed in 2017 and now has a market value in excess of £1billion. For investors, it provides a steadily growing income based on the rental agreements it has struck with clients.’ Over the past four years, the trust’s annual dividend has ticked up from 5.5pence a share to 5.86pence. For the current financial year, payments are up on last year.
A recent purchase has been Atrato Onsite Energy, a trust that installs solar panels on commercial buildings, allowing tenants to cut their energy bills. ‘Its time has come,’ says Hyde-Smith, ‘given the backdrop of surging energy prices.’ Other asset classes that the Waverton fund invests in includes commodities – with exposure to copper and forestry and a shareholding in Shell.
Shares in Waverton Real Assets can be bought through all major wealth platforms. The total annual charges are just above 0.6 per cent and investors can opt to take quarterly income or roll the income up into their holding. The stock market identification code is BF5KV17.