I’ve booked a £200 ‘profit’ with FSFL.
Cash for re-investment £796.00, plus dividends to be received this month to be re-invested back into the Snowball.
Month: July 2025 (Page 8 of 15)
These two FTSE 250 shares yield 8.9% and 9.3%. Can that last?
Our writer weighs some pros and cons of two high-yield FTSE 250 investment funds that are both focused on the renewable energy sector.
Posted by Christopher Ruane
Published 4 July
When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.
A couple of FTSE 250 investment funds in a similar business both have juicy yields at the moment. One offers just below 9%, while the other is even higher.
Could those yields last – and ought I to buy the shares in question for my portfolio?
Making money from the sun
The 8.9% yielder is Bluefield Solar Income Fund (LSE: BSIF), while 9.3% is on offer at Foresight Solar Fund (LSE: FSFL).
Over the past five years, however, those two shares’ prices have fallen 25% and 21%, respectively.
That partly explains the high yields. Another part of the explanation has been annual increases in the dividend per share during that timeframe.
Those annual increases have continued at Foresight Solar Fund. This year, however, has seen Bluefield Solar Income Fund hold its dividends per share steady for the payments declared so far.
So, given the high yield and also sizeable discounts to net asset value implied by the current share prices (Foresight’s discount is 22% and Bluefield Solar’s is 20%), what is going on here ? What might it signal about future dividend streams?
Variable financial performance
Bluefield has seen revenues grow steadily over the past five years. But income has moved around significantly. Last year, the fund actually made a loss of £10m.
While the fund has locked in the price of some of its power sales, the majority of its output is not sold at a pre-agreed rate. This means that there is a risk weaker energy prices could hurt earnings.
The flip side of that is also true, though: higher energy selling prices could boost profits.
Meanwhile, Foresight swung back to a profit last year after making a loss the year before. Its revenues have also moved around in recent years.
Challenges face the sector
Something I think these two FTSE 250 funds have in common is that they are in a sector with fairly unpredictable economics.
In March, Foresight pointed to “poor weather and persistent macroeconomic headwinds in the UK” as helping to explain why listed renewables companies may be trading at a discount to net asset value. It continued that “meaningful returns of capital will inevitably lead to a reduction in the listed renewables asset class, and we are likely to see examples of successful consolidation”.
In other words, there may be mergers or takeovers in the sector. Given that some solar companies are trading at a deep discount to net asset value, such consolidation would not necessarily be value-creating for long-term shareholders.
The economics of the sector have proven challenging so far. A shift in policy in recent years means that solar energy may not have as large a role in long-term UK power generation as some operators once hoped. That raises the question of how sustainable the current dividend yields will be in years to come. If energy prices weaken substantially, I see a risk that the dividends will be cut.
So, I see the high yields of both of these shares as a warning sign suggesting that the City is concerned about the risks involved in investing in the sector. Even a high yield can be unattractive if a share price falls enough.
Given that context, I do not plan to add either share to my portfolio.
Foresight Solar Fund Limited
(“Foresight Solar”, “FSFL” or the “Company”)
Share buyback programme extension
Foresight Solar, the fund investing in solar and battery storage assets to build income and growth, announces it has allocated up to a further £10 million to its ongoing share buyback programme, bringing the total to a potential £60 million, extending one of the renewables sector’s largest initiatives relative to net asset value (NAV), and strengthening capital returns to shareholders.
Since repurchases began, FSFL has reacquired more than 50 million shares, delivering a cumulative 2.6 pence per share increase in NAV.
Operating performance
Preliminary information from the global portfolio indicates that strong solar resource contributed to electricity production more than 5% above budget in the second quarter of 2025. The Company will publish an overview of its operational performance in August, along with its Net Asset Value update.
Dividend target
The strong global operating performance, in combination with Foresight Solar’s active power price hedging strategy, gives the board confidence in the 1.3x dividend cover target for this year.
During the second quarter, the investment manager continued to secure prices at levels accretive to dividend cover, including forward fixes and financial derivatives. Total contracted global revenues now stand at 88% for 2025, 77% for 2026, and 63% for 2027, with the average hedged power price for the UK portfolio at £85.48/MWh, £74.05/MWh and £74.51/MWh in each corresponding year.
Development pipeline
The latest round of grid capacity awards for battery storage projects in Spain have been announced. The Company has been allocated more than 100MW of capacity across five locations – three in Catalonia and two in the Balearic Islands – a significant step forward in the value creation opportunity from the development pipeline.
Alongside Muel, the 55MW solar project expected to reach ready-to-build status in Spain by the end of this year, the BESS projects demonstrate the proprietary development pipeline is nearing its goal of generating upside for investors as projects are de-risked from development to ready-to-build and to operations.
Divestments
In Australia, technical advisors finalised the necessary forecasting assessments to support bidder due diligence, and the sale process is moving ahead. Whilst this has taken time, the quality of information provided to the market is important to underpin portfolio value.
Good progress has been made in the divestment of the additional 75MW of operational solar projects, with advisors appointed and a live process underway in the market.
Regulatory environment
The government’s update on the Review of Energy Market Arrangements (REMA) was welcome news for the sector. The decisions offer much-needed clarity to investors and consumers, support the renewable energy build-out necessary to meet Net Zero goals, and incentivise the deployment needed to future-proof the country’s electricity network.
I’ve switched the FGEN holding in the Snowball into FSFL
A loss of £272.00 with the last position in FGEN but an overall profit for the Snowball of £1,831.77
Similar financials for both Trusts but FSFL goes xd next week which will enable the Snowball to earn 5 dividends in just over a year, a yield of 11%.
You may have bought SEIT for your Snowball for the above market yield.
If you bought in the circle you would have lost money. The two options would have been
1. To have taken your loss and waited for a better entry point, which took over a year.
2. Or you could have accrued the dividends and re-invested back into the share when it broke above the cloud.
Let’s use Monks as it’s featured below.
WITH THE BIG FAT PROVISION NOTHING BUT NOTHING WORKS ALL THE TIME.
In general if the price is below the cloud it’s raining on your parade.
If the price is above the cloud the sun is shining on your position.
In the cloud it could break either way, so you have to watch and wait.
When there is a market rout as in April, waiting for the price to go above the cloud you will be late to the party and at greater risk.
You can use a possible break out, here on the chart, the position took a while to print a profit and it’s always easier in hindsight.
If you could bottle it and sell it, you would be the richest person in the world.
THE BIG FAT PROVISION NOTHING BUT NOTHING WORKS ALL THE TIME.
Fund Focus: Investment trusts and strategic reviews
Posted on 4th July 2025 | By David Stevenson
In this month’s funds overview, we examine two out-of-favour UK-listed investment trusts in a state of flux.
Investment trusts and strategic reviews: Syncona and SDCL, funds in transition
The investment trust industry has been very busy in the last few months, inspired in part by US hedge fund Saba’s attempts to narrow chronic fund discounts. More generally, the investment company/trust sector has realised that there are too many small or underperforming funds, and that there’s a need for a strategic rethink. Sometimes that rethink ends up with a merger with another big fund or, in many cases, in a managed wind-down and return of capital. There have been so many strategic reviews, deals, and wind-downs that it’s sometimes easy to miss some interesting opportunities. I’ll concentrate on two in particular: Syncona, a listed venture capital life sciences fund, and SDCL Energy Efficiency Income Trust. Both have been trading at huge discounts, and both have decided to think more strategically about the future.
Let’s start with Syncona. This started off as a listed fund of hedge funds called BACITs that also raised money for research into cancer. Over time, the relationship with the Wellcome Foundation and its cancer research specialists blossomed, and BACITs decided to refocus. It was transformed into a UK-based, first-tier biotech venture capital firm with its own life sciences portfolio of early-stage assets, courtesy of the Wellcome Foundation. After an initial string of successful IPOs, the shares in the VC started to drift and have spent the last three years going nowhere, well, actually down to be more accurate. Some of this can be attributed to a persistent bear market in Biotech stocks, but a larger factor is that investors lost faith in its early-stage investment approach in private businesses, and frankly, some of its portfolio businesses underperformed. For more years than I can remember, Syncona kept pushing on with a strategy that was clearly not working with investors – the discount on the shares kept widening. Change was needed!
It took many months, but we finally have some resolution, not surprisingly, as the shares traded at a colossal discount of over 50% and have declined by 52% over the last three years. Last week, Syncona announced its full-year numbers and a strategy update. Here are some high/low lights, courtesy of the funds’ research team at Peel Hunt :
– a NAV decline of c.9.5% to £1,053m (vs. £1,239m in March 2023), or 170.9p per share (vs. 188.7p in FY24), with the decline in Autolus’ share price being the key driver
– Syncona reported a maturing portfolio of 14 companies, with 78.5% of strategic portfolio value now concentrated in eight clinical-stage and commercial companies, including two late-stage clinical and one with a marketed product
– An orderly realisation of portfolio assets, aiming to balance timely cash returns to shareholders with value maximisation. Syncona reiterated its confidence in the long-term opportunity of its strategy to “create and build companies leveraging world-class research.” The company is working closely with the board to explore the launch of a new fund for interested existing shareholders and prospective new investors. Syncona intends to continue to update the market on portfolio progress and stakeholder engagement outcomes in due course.
Peel Hunt analysts observe that the current discount “ significantly undervalues the portfolio (e.g. the current market cap is c.53% covered by cash alone)” while Numis analysts add that the
“proposed approach should give some comfort to listed fund investors that they will see cash come back as realisations occur, although this may take some years…. The board is also exploring accelerated realisations, which it notes “may include a sale of a small portion of its interests in certain of its portfolio companies at a modest implied premium to the current share price and at a discount to NAV”. If achieved, it would return the net proceeds and cash allocated to support further investment on the assets. The company is seeking to sell the assets to the new fund if it can raise additional capital.”
I suspect that the path to cash returns will be long and winding, but I think there might well be value in the shares, especially given the cash position and the chunky discount.
Next up, we have one of my favourite income ideas – SDCL Energy Efficiency. This invests in a range of energy efficiency and renewable assets, which are frankly rather dull, like CHP (community heat and power). The fund trades at a 42% discount with a covered yield of 12.3%. The fund has done many things right: it has sold assets at book value, bought shares (as has the manager), focused on reducing its debt (which is relatively high for many investors), and attempted to reach out to income-hungry private investors via different comms channels.
The fund also issued its annual update last week, and yet again, plenty of boxes were ticked. The managers released improved performance metrics, and the results were slightly better than I expected. Additionally, the management fee was reduced. That said, I’m still a little nervous about the high level of debt on the balance sheet and would prefer to see this brought down more aggressively. I’m also wary that the dividend is ‘only’ 1.0 to 1.1 times covered – I would feel a lot more confident if that was closer to 1.3 times covered.
Nevertheless, the big development came from the chair’s (Tony Roper) statement, which announced that it is “considering all strategic options to deliver value for all shareholders effectively and efficiently”, whilst also noting that it is “both in the context of the Company’s longer-term plan to drive value for shareholders and in a more wholesale and strategic manner”. The board plans to gather opinions of shareholders on possible outcomes over the coming weeks.
This is excellent news and could result in several outcomes, including a trade sale (possibly involving strategic investor General Atlantic), a take-private approach, or a more focused approach on reducing debt and selling assets. I stick with my long-term buy on the shares, and in the meantime, that generous dividend yield should help!
This trust has underperformed for years. Is it finally due a turnaround?
The manager has admitted mistakes but remains convinced of the strategy
Charles Cade
10 July 2025
Questor is The Telegraph’s stock-picking column, helping you decode the markets and offering insights on where to invest.
How long should you persist with an underperforming fund? Should you sell and cut your losses, hold and wait for a turnaround, or even add to the holding? This is the scenario facing investors in Monks, a £2.4bn global investment trust managed by Baillie Gifford.
The reason Monks has lagged global equity markets in recent years is not hard to understand. Like other funds managed by Baillie Gifford, Monks has a clearly defined investment approach that prioritises long-term growth. This style performed well for many years, but has suffered since the period of low interest rates ended in 2021. Even when AI mania drove markets in 2023, Monks struggled to keep up with global markets as it was underweight the ‘Magnificent Seven’.
A sell-off in growth stocks following Trump’s Liberation Day in April this year was particularly painful, and although performance has picked up since, the net asset value (Nav) total return since the start of 2022 is just 4pc versus 33pc for its FTSE World benchmark.
Lead manager, Spencer Adair, acknowledges that Monks was slow to rebalance the portfolio in late 2021 when early-stage growth stocks represented more than half of the portfolio. In addition, some mistakes have been made in stock selection. For instance, a number of healthcare holdings have performed poorly over the past year, and a long-standing position in Moderna (vaccines) has been sold.
However, he points out that the portfolio is high quality, with superior margins, stronger cash flows and lower debt than global indices. The three-year annualised earnings growth forecast remains healthy at 12.5pc versus 8.6pc for the market, but the valuation premium on a forward price-to-earnings basis has decreased from 30pc in early 2022 to just 7pc.
A key focus is companies that power, build or benefit from AI, and these now represent 25pc of the portfolio. Core holdings include Nvidia, Microsoft and Meta, while recent additions include the semiconductor businesses Disco Corporation and Kokusai Electric. Another theme over the past year has been to find companies that are resilient in the face of unpredictable policymaking and rising global tariffs. New holdings include adaptable businesses, such as Uber, and companies focused on local markets, such as Nubank, a Brazilian online bank.
Despite being one of the largest investment trusts, Monks tends to have a relatively low profile, overshadowed by its stablemate, Scottish Mortgage, a FTSE 100 member with a market cap close to £12bn. The two funds share a similar philosophy, focused on long-term growth with no regard to index weightings. However, Monks has a more diversified portfolio, with the top 10 holdings representing 33pc of portfolio vs 44pc for Scottish Mortgage.
Monks also has a broader remit in terms of its exposure to growth companies, and the portfolio is balanced between three categories – Stalwarts, Rapid and Cyclical – with the aim of delivering more consistent returns in the long term. The Stalwarts (36pc by value) are well-established, profitable businesses with strong franchises, such as Microsoft and Amazon. Rapid (33pc) are earlier stage businesses with vast growth potential but are higher risk, such as Nvidia and DoorDash. Cyclical companies (31pc) are well managed and positioned to grow their earnings, but are more susceptible to macroeconomic and capital cycles, such as TSMC and Ryanair.
Another key difference from Scottish Mortgage is that Monks has a far lower exposure to unquoted investments of 3.1pc (including ByteDance, Epic Games and SpaceX) plus 2.7pc in Schiehallion, another Baillie Gifford-managed fund, this time investing in private companies. By comparison, Scottish Mortgage has over 25pc invested in unquoted stocks.
Questor last reviewed Monks in November 2022. With hindsight, the Hold recommendation proved to be wrong and investors would have been better selling out. The question now is whether the fortunes of growth investing are set to turn.
One drawback is that investors are not paid to wait, as Monks has a negligible yield. On the other hand, it has a low expense ratio of 0.43pc and investors are benefiting from an uplift to Nav as a result of buybacks, equivalent to 1.1pc over the past year. Having issued shares when Monks’ shares traded at a premium to Nav, it is encouraging that the board has committed to buying back shares, with the aim of keeping the discount in mid-single digits.
It is not clear that this is the time to add to US equity exposure, which represents almost 60pc of Monks’ portfolio. However, Questor believes Monks holds attraction as a way to harness the best ideas from Baillie Gifford through a diversified portfolio of growth stocks.
Since the Global Alpha team took over management in March 2015, the fund’s annualised Nav total return of 11.2pc is closely in line with global markets, despite the recent period of underperformance.
Questor says: hold
Ticker: MNKS
Latest share price: £13.06
Dividend earning Trusts will provide income thru thick and thin, I expect there will be plenty of thin but enjoy the thick when it happens.
