I’ve sold the portfolio shares in UKW Greencoat Win, after all charges, for a profit of £1,315.00.
Whilst the high yield looks secure, the discount to NAV has closed and there are higher yielding shares currently available in the market.
Michael Foster, Investment Strategist
Updated: October 26, 2026
We’ve got a very nice buy setup in 7%-paying closed-end funds (CEFs) in front of us. Few people realize it.
It stems from the fact that, while stocks have taken a breather after booking strong gains so far this year, many CEFs are lagging more than they should be. The cause? Overdone investor fear around, you guessed it, AI.
That dour mood has set up a particularly interesting dynamic in CEFs holding US stocks:
The chart above, from my CEF Insider service, shows that these funds’ average return based on their market prices (in green) is up about 7.2% so far this year. That’s okay, but it’s well behind their roughly 11% returns on net asset value, or NAV—the value of these funds’ underlying portfolios, in other words.
That gap has resulted in attractive discounts to NAV among these funds. The silly thing is that investors should at least be bidding equity CEFs up in line with their portfolios.
As we’ve discussed recently, corporate earnings and revenue are up sharply and are expected to keep rising. Equity CEFs’ returns based on market price should reflect that—and a 7.2% return on the year just doesn’t cut it.
4 Popular (for CEFs!) Equity Funds, Ranked
The thing to bear in mind is that not all discounted equity CEFs are attractive, and some of their discounts are well-deserved. It’s up to us to separate the contenders from the pretenders.
With that in mind, we’re going to examine four high-yield CEFs you may have heard of. All focus on equities and all sport high payouts. But only one is a buy.
They are the 23.7%-yielding (!) BlackRock ESG Capital Allocation Term Trust (ECAT); the 10.9%-paying Gabelli Utility Trust (GUT); the BlackRock Technology and Private Equity Term Trust (BTX), with a 7.3% yield; and the BlackRock Science and Technology Term Trust (BSTZ), which yields 7.1%.
These funds all have their specialties, but that’s not what we’re going to focus on here. Instead, we’ll base our analysis on the recent movements of their discounts to NAV:
GUT’s Shocking Premium
I’m going to start with GUT (in green above) because it’s the obvious standout here, with a sky-high 96.4% premium to NAV.
GUT is a utility fund that holds some of the biggest power generators in the US, including NextEra Energy (NEE), Duke Energy (DUK) and Wisconsin-based WEC Energy Group (WEC).
Income investors (me included) love utilities. They are, after all, a lower-risk way to generate income and potential upside. But we don’t love them so much that we’d pay nearly $2 for every $1 of assets! But that’s what anyone who buys GUT now is essentially doing.
So our first elimination is an easy call: Dramatically overpriced GUT is out.
That leaves ECAT, BTX and BSTZ. Two of these—BTX and BSTZ—are highly tech-focused, as their names suggest. If you’re worried about tech because it’s been falling faster than other sectors, I’d urge you to reconsider. Because historically, tech pullbacks have more often than not been buying opportunities.
But even if you want to buy ECAT to avoid tech, I’d still say you’re out of luck. For one, its top-three stock holdings are NVIDIA (NVDA), Alphabet (GOOGL) and Taiwan Semiconductor Manufacturing (TSM). So even though ECAT doesn’t have tech in its name, it’s still a tech-heavy fund.
There is another concern here: ECAT’s absurdly high 23.7% yield is quite simply unsustainable. The fund’s 9% annualized total return since its IPO is far short of the profit needed to maintain payouts.
One reason why that return is likely to stay low is the fund’s ESG mandate, which requires that 80% of its assets be in assets that fit the fund’s environmental, social and governance requirements. Politics aside, this requires an extra level of research and oversight that is not free, and those costs weigh on returns.
More worrying, ESG has been falling out of favor even among investors politically aligned with ESG goals, which is likely going to drag demand on the fund and keep its discount from closing.
These aren’t the only reasons ECAT has relatively weak portfolio returns, though.
Tech “Latecomer” ECAT Lags the Pack
If we look at the last year’s total NAV return for each fund, we see a problem with ECAT (in blue above): Its fundamentals are weak compared to those of BTX (in orange) and BSTZ (in purple). This is a concern with ECAT: It has been pivoting to tech recently, to follow the trend, and it’s done that only after the trend was apparent.
This isn’t the biggest red flag, because sometimes an asset manager dips into an opportunity slowly, out of caution. But the CEF market can punish that slow action by giving the fund a bigger discount.
BTX’s Discount Widens. It’s Still Not Cheap Enough
This should have happened naturally with ECAT, as equity CEFs’ NAV returns outpaced their returns based on market price. And it did—but only to a point. The blue line in the chart above shows that this fund traded at a slight premium a little over a month ago, and that premium has now evaporated, with a steep drop to a 6% discount.
But that discount is still less generous than those of BSTZ (in purple) and BTX (in orange). This suggests the market hasn’t fully priced in ECAT’s weaker fundamentals, setting up the risk of its discount widening in the coming weeks and months.
So ECAT is out.
If we look just at the BTX and BSTZ discounts above, something else becomes clear: They look like they’re stabilizing, and perhaps shifting back to narrowing, with a 9.6% discount for BSTZ and 11.3% for BTX—narrower than they were just a few days ago.
So which one are we picking here? Ultimately, the one whose discount has greater momentum.
In the case of BSTZ, its current discount is around where it was at the start of the year. That’s not bad, but we want to buy discounts that are still wide but boast momentum.
And that’s where BTX wins. Its current 11.3% discount is still attractive, and it’s heading the right way: much narrower than the 15.5% at which it started the year. That suggests the discount could keep narrowing as this latest round of tech panic fades, putting upward pressure on BTX’s share price.
Thursday 5 November
Aberdeen UK Smaller Cos Growth Trust PLC ex-dividend date
AEW UK REIT PLC ex-dividend date
BlackRock Smaller Co Trust PLC ex-dividend date
Brunner Investment Trust PLC ex-dividend date
CVC Income & Growth EURO Ltd ex-dividend date
CVC Income & Growth GBP Ltd ex-dividend date
Dunedin Income Growth Investment Trust PLC ex-dividend date
Edinburgh Investment Trust PLC ex-dividend date
GCP Infrastructure Investments Ltd ex-dividend date
Tritax Big Box REIT PLC ex-dividend date
VinaCapital Vietnam Opportunity Fund Ltd ex-dividend date
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Trust Intelligence from Kepler Partners
UKW’s Q3 NAV update shows its resilience.
William Heathcoat Amory
Updated 30 Oct 2026
Disclaimer
Disclosure – Non-Independent Marketing Communication
This is a non-independent marketing communication commissioned by Greencoat UK Wind (UKW). The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.
Greencoat UK Wind (UKW) has released its factsheet for 30/09/2026, together with an update on the performance of the portfolio to that date.
The key highlights are:
- UKW’s NAV per share increased by 1.6p or 1.2% during Q3 to 135.7p, with strong cash generation and higher power prices more than offsetting the impact of higher discount rates, the quarterly dividend, and depreciation.
- Electricity generation from the portfolio over Q3 was 2% below budget, although generation remains 3% above budget year-to-date. The team continues to expect both 2026 EBITDA (£560-660m) and net cash generation (£350-410m) towards the upper end of the guided range. Dividend cover projections remain at c. ≥1.7x for the year.
- Gearing has reduced to 41.1% from 41.7% at 30/06/2026. While gearing remains above the target of 40%, the team will be looking to reduce debt over time. Since the NAV date, UKW has refinanced £150m of debt due in 2027, and the total cost of debt has nudged below the 5.1% reported at June 2026.
Kepler View
Greencoat UK Wind’s (UKW) model has been designed for resilience since the outset when it IPO’d in 2013. Since then, it has continued to deliver a dividend linked to UK inflation. Over the past couple of years, higher interest rates have tested the renewable energy infrastructure sector, and the strength of UKW’s model has seen it come through this difficult period without any scratches. It continues to pay an inflation-linked dividend (which yields 8.9% at the current price of 120p), continues to generate surplus capital, and it continues to repay and refinance its debt.
Ultimately, UKW’s ability to self-generate capital to reinvest is central to its resilience. At its simplest, because the investment returns UKW generates from its portfolio are greater than its dividend, it is able to recycle this surplus capital into accretive acquisitions which extend the life of shareholder’s future cash flows, or buybacks at wide discounts if the opportunity presents itself. At a recent capital markets event (for a video summary, click here) the team reiterated their belief that UKW would have between £900m to £1.4bn of excess capital to reinvest over the five-year period 2027-2031, and outlined the four types of accretive investment opportunities they will be evaluating.
UKW has clearly been a beneficiary of rising power prices – which have continued to rise since the NAV date. The effect on UKW’s revenues has been tempered by the Electricity Generator Levy, which saw 45% (and now 55%, since 01/07/2026) of wholesale revenues above c. £82 per MWh being paid to the UK government. Overall, UKW aims to retain a 50:50 balance of fixed and variable revenues over the long term. The team has a number of different ways to manage the balance of cash flows derived from the portfolio – through acquiring CFD-based assets, corporate PPAs, as well as short-term hedges. A combination of this management of fixed and variable cash flows, as well as accretive recycling of surplus cash, means that the team is confident they can continue to extend shareholder cash flows long into the future.
UKW’s shares have recovered somewhat, and now trade on a c. 12% discount. The team is optimistic that the electrification of the UK economy puts it in a good place to continue to deliver an inflation-linked dividend long into the future. There are political challenges ahead, but as the team continues to note, the consultations on wholesale CFD’s – allowing generators to exchange variable revenues for a fixed-price contract, could result in a win-win for both consumers as well as generators. In our view, UKW’s resilient model means the future is looking increasingly bright for the trust.
Income year to date £11,193.00
Expected income before the end of the year > £2,498.00
There is also income of £408 as a return of capital from VPC .
The SNOWBALL, tks to Mr. Market may equal the 2033 figure but it may be a bridge to far to repeat the figure in 2027, although we will still finish well ahead of the current plan. It will soon be time for a new plan.
The SNOWBALL has a comparator share, the comparison is how much would you receive versus the option using VWRP.
Current income £6,747.00
As the earned dividends in the SNOWBALL are received and re-invested the gap should grow.
The rules for the SNOWBALL.
Rule 1.
Rule 2.
Rule 3.
