Ecofin Global Utilities and Infrastructure (EGL ) has made an impressive return to form, helped by US energy utility Vistra, its ‘best decision of the year’.

The £195m portfolio of global utility and infrastructure stocks made a stellar recovery in the year to the end of September, racking up a 25.9% net asset value (NAV) total return. Shareholders saw a 24.8% return, including dividends reinvested, according to recently published annual results. 

That is in stark contrast to the previous year when the NAV fell 8.6% and shareholders lost nearly 22%. This year’s returns also beat the S&P Global Infrastructure index and the MSCI World Utilities index, up 18% and 23.7%, respectively.

The total dividend was increased in the year to 8.1p, up 5.2% on the previous year, although it was again not fully covered by revenue of 7.17p per share. However, the board was confident about the 2025 dividend, increasing the quarterly payout by 3.7%. That is equivalent to an 8.5p distribution for the year, or a 4.7% yield based on the current share price. 

Manager Jean-Hugues de Lamaze, who is now managing the fund under the Redwheel banner after it bought Ecofin this year, said the main driver of returns was Vistra, a new addition to the fund.

He said adding the US gas, coal, nuclear and solar utility, which has one of the largest battery storage facilities in the world, in November 2023 was ‘one of our best decisions in the year’ as the shares soared 212%.

Compared with its peers, Vistra has ‘low debt ratios and above average free cashflows, and nearly half its generation capacity [is] in Texas, where we see structurally higher power prices because baseload capacity is being replaced by renewables’, said Lamaze.

The manager doubled the position in February, when Vistra purchased Energy Harbour, which gave the group the second-largest nuclear power fleet in the country. ‘This coincided with a sea change in attitudes to nuclear energy,’ said Lamaze.

Vistra is now the trust’s second-biggest holding, at a 4.6% weight. 

Nuclear facility owner and operator Constellation, which was spun out of Exelon in 2022, was another top 10 holding, at 3.5%. Its 116% share price appreciation over the year enabled a bounceback in returns.

Constellation, which announced a nuclear power tie-up with Microsoft in September, and Vistra are benefiting from demand for constant decarbonised electricity and US production tax credits, which provide ‘a floor price for nuclear electricity and support investing to extend the life of plants’.

‘Data centres are increasingly connecting directly to nuclear plants and ready to pay a significant premium over wholesale power prices to secure their need for baseload power,’ said Lamaze.

UK-exposed stocks performed well over the year, with National Grid, SSE and Drax being ‘well exposed’ to the themes of transmission, distribution and electrification that Lamaze is focused on.

In particular, National Grid’s equity issue ‘provided an opportunity to manage position sizes and add value’.

The rally in stock markets this year has led to high valuations but Lamaze said listed infrastructure is ‘still undervalued’.

‘We have seen a revaluation for US utilities this year, leading us to take some profits since the financial year end, but this uplift mostly reflects strong earnings rather than a reassessment, which we think is merited, of the growth opportunities for the sector,’ he said.

In the five years to the end of September, Ecofin Global Utilities and Infrastructure shareholders enjoyed a 51.1% total return, according to its annual results. This was ahead of 28.8% and 31.3%, respectively, for the S&P Global Infrastructure and MSCI World Utilities indices.