This Flawed Chart Could Spark a 2026 Selloff

by Michael Foster, Investment Strategist

Every year, the stock market has a theme. And I’ve got a pretty good idea of what 2026’s will be.

Simply this: If you buy stocks in the new year, your return will be zilch – at best – for a decade. Maybe more.

Why do I say that? Because the market’s price-to-earnings (P/E) ratio is high by historical standards.

Trouble is, most people are reading this popular indicator all wrong. That disconnect (and the fear it’s starting to cause, which could get worse in 2026) is setting up a nice short-term buying opportunity for us.

Valuation worries are being amplified by this chart from Apollo Global Management, which could easily become the poster child for fearful investors next year:

It comes from Apollo’s chief economist, Torsten Sløk, who notes that the estimated returns we should expect from the S&P 500 over the next decade are zero. This argument is based on that “high” P/E ratio I just mentioned. In other times where we saw a similar P/E ratio, according to Apollo’s analysis, we saw 10 years of flat to negative returns.

This argument has a logical end point: You may as well sell, because we’re in for a long period of flat returns at best.

Except the argument is wrong, and it’s not as logical as it looks.

The issue in the chart above is with what each of these dots represents. The S&P 500 as an entity has only existed since 1957, and the first ancestor to the index showed up about 100 years ago. So at most, we should have 10 dots here to cover 10 decades. Instead, we have many more than that because Apollo is using monthly reads of the index to fill out the chart and get more data points.

That’s not a small decision. It means that many of these dots are almost identical, just shifted forward a bit. For instance, the dots for November and December 2015 share 119 out of 120 months of the same data, so the chart looks like it has lots of separate data points, but it really doesn’t.

Statisticians call this “autocorrelation,” and it often results in charts that look like they have conclusive results when they really don’t say much at all.

Plus, let’s not forget that P/E ratios can be “high” for different reasons. Consider, for example, the spring of 2009, when the S&P 500’s P/E ratio shot above 120. I think we know how the following years played out.

Those Who Sold This “High” P/E Missed Years of Gains

An investor who bought the S&P 500 at its highest P/E in living memory earned a 14.5% total return in the next decade, as the index’s P/E dropped to a more “normal” range.

S&P 500 Returns Soared as Valuations Dropped

In this case, the logic of “Don’t buy stocks when P/E ratios are high” doesn’t work. That’s because – and this is the real takeaway – P/E ratios can jump because prices get too high, sure. But they can also soar when the “E” part of the equation, earnings, slump, as they did in early 2009.

The real question, then, is “Are companies growing profits now?” The answer is yes.

In 2025, US companies saw a 12.1% rise in earnings per share from a year ago. This suggests stock prices should rise at least 12.1% just to maintain the same P/E ratio.

But since earnings growth is surging (an 11% rise in 2024, up from 1.1% in 2023 and 4.1% in 2022), and since revenue growth is unusually high (up 7% for 2025), we should see more than 12.1% yearly gains. That’s exactly what we’re seeing now. It wouldn’t be surprising if we keep seeing this in the future.

Flawed Logic Can Still Crash Markets

Nonetheless, most people put more weight on the “P” than the “E” in “P/E ratio,” so we should expect Apollo’s chart to be replicated, and even take hold in investors’ minds. If that happens, we should be cautious and ready to buy when others sell.

That’s why I’m starting to like funds like the Nuveen NASDAQ 100 Dynamic Overwrite Fund (QQQX). This one is a nice, cheap 8%-paying hedge against uncertainty. It sells covered-call options, or the opportunity to buy its stocks – the tech-focused names in the NASDAQ 100 – at a fixed future price and date.

No matter how these trades play out, QQQX keeps the fee, or “premium,” it charges for this right. Plus, its focus on the big-cap tech stocks of the NASDAQ also means this index tends to have higher volatility when markets get scared, juicing payouts further.

This strategy generates more premium cash in volatile markets. That’s the opposite of what we’re seeing now, as the VIX – the so-called “fear indicator” – remains low.

Market Stays Calm, Despite Investor Fears

In other words, we have a relatively calm market as I write this. That, in turn, means options are selling for cheaper than normal. And unusually cheap options compound the discounts to NAV on option-selling funds like QQQX. Right now, the fund’s discount is at a multi-year low.

Calm Markets Put QQQX on Sale

We saw that discount fade a bit in April, when volatility spiked, only for it to drop back to double-digits as markets remained calm and stocks steadily gained.

But if the narrative behind Apollo’s chart catches on, it could narrow that discount again, driving gains and bolstering QQQX’s 8% dividend. That possibility alone makes the fund a nice hedge against a market panic in 2026.

Foresight Environmental Infrastructure – Pushing on despite regulatory upheaval

• 17 December 2025
• QuotedData
• Richard Williams

Pushing on despite regulatory upheaval

The renewable energy infrastructure sector was dealt a blow last month as the government outlined plans to change the inflation link in existing clean energy incentives from the traditionally-higher RPI to CPI from next year – four years ahead of the planned changeover. The impact on Foresight Environmental Infrastructure (FGEN) would be marginal under this option (0.5% reduction in NAV), due to the diversified nature of its portfolio. However, a more radical second proposal was also put forward that would freeze uplifts until the perceived overpayments are clawed back. This move calls into question the UK government’s reputation as a sound investment partner for private capital and has the potential to damage long-term investment in UK infrastructure.

Meanwhile, FGEN’s portfolio continues to produce robust revenue streams – more than covering its progressive dividend, which currently yields almost 12% – and it will soon benefit as its growth assets become fully operational.

Progressive dividend from investment in environmental infrastructure assets

FGEN aims to provide its shareholders with a sustainable, progressive dividend, and to preserve capital values. It invests in a diversified portfolio of environmental infrastructure technologies, targeting projects characterised by long-term stable cash flows, secured revenues, and inflation linkage. Investment in these assets is driven by the need to address climate change and societal demand for sustainability.

12 months ending	Share price TR (%)	NAV total return (%)	Earnings per share (pence)	Adjusted EPS (pence)	Dividend per share (pence)
31/03/2021	6.9	1.5	1.5	6.7	6.76
31/03/2022	7.3	34.1	30.6	7.0	6.80
31/03/2023	12.2	13.1	14.9	6.7	7.14
31/03/2024	(15.8)	(1.8)	(2.1)	7.5	7.57
31/03/2025	(15.9)	0.6	(0.4)	8.6	7.80

Source: Bloomberg, Marten & Co

Market backdrop

UK government proposes change to inflation measure in existing incentives

Government proposals to change the inflation measure used in existing clean energy incentives have hit share prices across the renewable energy infrastructure sector. The Department of Net Zero and Energy Security launched a consultation in October on changing the inflation indexation calculation used in the renewables obligation (RO) and feed-in-tariffs (FIT) schemes from RPI to CPI.

Two options have been put forward to the industry. Option one is for a simple switch to take effect in 2026; four years before the planned 2030 changeover. Option two is more radical and would involve freezing the subsidy until 2035 to claw back what the government views as historic overpayments to renewable operators.

The impact on FGEN and the wider sector’s NAV of the two proposed outcomes is shown in Figure 1. FGEN’s diversified portfolio means that a lower percentage of its portfolio revenue (around 29%) is subject to RO and FIT incentives than its pure-play renewable peers, and as such, it should be the least impacted.

Figure 1: Estimated NAV impact of proposed change to RO and FIT inflation measure

Company	Option 1 (%)	Option 2 (%)
FGEN	(0.5)	(6.3)
Bluefield Solar	(2.0)	(10.0)
Foresight Solar	(1.6)	(10.2)
Greencoat UK Wind	(1.7)	(7.5)
NextEnergy Solar	(2.0)	(9.0)
Octopus Renewables Infrastructure	(1.1)	(4.0)
The Renewables Infrastructure Group	(0.5)	(2.2)

Source: Company announcements

Option one impact FGEN the least among peers

The manager estimates that option one would reduce FGEN’s NAV by 0.5p per share or 0.5%, while option two would knock 6.6p, or 6.3%, off the NAV. In both scenarios, the manager adds, dividend cover would not be materially impacted in the near-term.

The government is seeking to reduce energy bills and estimates that the changes under option one would see the average household bill for 2026-27 fall by just £4. This increases to £13 under the second option (before any costs such as an increase in the cost of capital).

The proposal follows the Office for National Statistics’s call for RPI to be dropped in favour of its preferred measure of CPIH, which includes housing costs, because RPI has tended to over-estimate inflation, thereby inflating contractual payments linked to it. The government has not commented on why it is not proposing a change to CPIH.

The government said that using CPI to annually adjust the RO and FIT buyout price (which were withdrawn in 2017-2019 but will continue until 2037 for renewable energy operators that built wind and solar farms under the schemes) was “proportionate and fair”, ensuring a stable and predictable return for generators and savings for consumers. It added that this would also prevent the risk of overpayment, as occurred when energy prices and inflation soared after Russia’s invasion of Ukraine in 2022.

QuotedData view

Move could erode investor confidence in UK government

To unilaterally change the terms of its contract with the renewables industry would not only undermine confidence in the sector and create an unwelcome precedent, but would also erode investor confidence in the UK government as a business partner – at a time when private investment in UK infrastructure is critically needed. The short-term saving on consumer bills is very likely to be overshadowed in the long term by a higher return demanded by infrastructure investors and developers to compensate for an unreliable partner. The UK government’s actions echoes a similar move by the Spanish government in the mid-2010s, which retrospectively altered the terms of existing renewable energy projects, replaced FITs with new schemes and levied a tax on electricity producers. Investor confidence was irreparably damaged and led to a wave of legal challenges that is still rumbling on today.

Interim results

FGEN reported a NAV of £652.7m or 104.7p per share at 30 September 2025 – a 1.7% fall over the six-month period. Factoring in dividends of 3.94p, this equated to a 2.0% NAV total return in the period.

Distributions received from projects over the six months was £39.7m (six months to September 2024: £46.6m). This underpinned the dividend with a coverage of 1.22x, and helped fund further share buybacks. The value of the portfolio fell £13.8m over the period, as shown in Figure 2.

Figure 2: FGEN portfolio valuation in £m, as at 30 September 2025

Source: FGEN, Marten & Co

Drivers of portfolio returns

Several factors impacted FGEN’s NAV. We detail these factors and their sensitivities below, beginning with inflation.

Inflation

Short-term RPI inflation assumptions raised 50bps

Inflation assumptions used to value FGEN’s portfolio (based on actual data and independent forecasts) were raised 50bps to 4.0% RPI inflation for 2025 and 3.5% for 2026 and then falling to 3% until 2030 and 2.25% thereafter. This resulted in a £6.1m uplift in NAV.

As mentioned earlier, it is likely that the inflation measure used on RO and FIT contracts will revert to CPI next year. FGEN’s CPI inflation assumptions are 2.75% in 2025 and 2.25% thereafter. CPI was at 3.6% at the end of October 2025. Figure 3 shows RPI and CPI inflation over the past five years.

Figure 3: UK RPI and CPI year-on-year (%)

Source: ONS, Marten & Co

Power prices

Power prices have fallen slightly over the six months, as shown in Figure 4, and a marginal change in forecasts for future electricity and gas prices compared to forecasts at 31 March 2025 resulted in a £6.5m reduction in FGEN’s NAV.

Figure 4: UK power prices

Source: Bloomberg – UK baseload

Fixed prices secured on the majority of portfolio

FGEN looks to fix the prices for most of its output, in an attempt to de-risk its exposure to volatile market prices. At 30 September 2025, the portfolio had price fixes secured at 63% for the Winter 2025/26 season, 24% for Summer 2026 season, and 25% for Winter 2026/27.

Over the life of the asset, an increase in electricity and gas prices of 10% would add £33.8m (or 5.4p) to NAV and a 10% fall in power prices would take off £33.1m (or 5.3p).

FGEN’s manager states that in the event that electricity prices fall to £40/MWh (they are currently at around £70/MWh) and gas prices fall by a corresponding amount, the company would maintain a resilient dividend cover for the next three financial years.

Discount rates

Figure 5: Long-term (10-year and 30-year) UK gilt yields

Source: Bloomberg, Marten & Co

The weighted average discount rate now sits at 10.1%

Despite a slight fall over recent months, UK gilt yields remain at elevated levels, as shown in Figure 5. The discount rates used to value FGEN’s portfolio remained unchanged. However, FGEN’s weighted average discount rate moved out slightly to 10.1% (from 9.7%), primarily due to ongoing investment into growth assets and increases in their values. There was no change to NAV resulting from changes to the discount rate.

A reduction in the discount rate of 0.5% would result in an uplift in value of £19.4m (or 3.1p per share), while a downward movement in the portfolio valuation of £18.2m (2.9p per share) would occur if discount rates were increased by the same amount.

Asset allocation

FGEN has one of the most diversified portfolios among its renewable energy infrastructure peers, with it currently invested in 10 sectors across 39 projects. The manager splits the portfolio into three key environmental infrastructure pillars: renewable energy generation (71% of the portfolio – wind, solar, AD, biomass, energy from waste, and hydropower); other energy infrastructure (11% – battery energy storage and low carbon transport assets); and sustainable resource management (18% – waste and water management assets and controlled environment assets).

Figure 6: Portfolio value split by sector, as at 30 September 2025

Figure 7: Portfolio split by remaining asset life as at 30 September 2025

Source: FGEN, Marten & Co

Source: FGEN, Marten & Co

Figure 6 displays FGEN’s portfolio by project type, as at 30 September 2025. The weighted average remaining asset life of the portfolio was 16.2 years, although the manager feels it is being conservative in this area, especially in its AD portfolio.

Potential Life extensions for AD assets could result in a substantial valuation uplift

These are currently conservatively valued over the life of the renewable heat incentive subsidy (RHI) that they receive. The manager says that there is growing evidence, including several market transactions, pointing to valuing these AD facilities beyond the end of the tariffs and possibly into perpetuity. It has modelled extension scenarios for its AD portfolio, including revenues being derived from corporate offtakes, green certificates and/or a lower level of government support mechanisms. It has modelled that this would result in a substantial valuation uplift of between £10m and £20m (1.6p to 3.2p) and significantly extend the weighted average life of the portfolio.

Some clarity is required on the position that biomethane will take in the wider net zero and energy transition plans in the UK, with the government currently developing a biomethane policy framework, which the manager expects to be released next year.

The majority of its portfolio (88%) is located in the UK, with the 12% outside the UK accounted for by FGEN’s Italian and Norwegian investments.

Figure 8: Portfolio split by operational status as at 30 September 2025

Figure 9: Net present value of future revenues by type as at 30 September 2025

Source:  FGEN, Marten & Co

Source:  FGEN, Marten & Co

FGEN’s construction exposure has reduced to 3%, with the Rjukan asset transferring to early-stage operations (detailed below).

The top 10 largest assets make up 54% of the total portfolio value. Figure 10 details the assets in FGEN’s portfolio, at 30 September 2025. The company has low exposure to individual assets, with no asset accounting for more than 10% of the portfolio.

Figure 10: FGEN portfolio¹ of projects by type, as at 30 September 2025

Asset	Location	Type	Ownership	Capacity(MW)	Commercial operations date
Renewable energy generation
Bilsthorpe	UK (Eng)	Wind	100%	10.2	Mar 2013
Burton Wold Extension	UK (Eng)	Wind	100%	14.4	Sep 2014
Carscreugh	UK (Scot)	Wind	100%	15.3	Jun 2014
Castle Pill	UK (Wal)	Wind	100%	3.2	Oct 2009
Dungavel	UK (Scot)	Wind	100%	26.0	Oct 2015
Ferndale	UK (Wal)	Wind	100%	6.4	Sep 2011
Hall Farm	UK (Eng)	Wind	100%	24.6	Apr 2013
Llynfi Afan	UK (Wal)	Wind	100%	24.0	Mar 2017
Moel Moelogan	UK (Wal)	Wind	100%	14.3	Jan 2003 & Sep 2008
New Albion	UK (Eng)	Wind	100%	14.4	Jan 2016
Wear Point	UK (Wal)	Wind	100%	8.2	Jun 2014
Biogas Meden	UK (Eng)	Anaerobic digestion	49%	5.0	Mar 2016
Egmere Energy	UK (Eng)	Anaerobic digestion	49%	5.0	Nov 2014
Grange Farm	UK (Eng)	Anaerobic digestion	49%	5.0	Sep 2014
Icknield Farm	UK (Eng)	Anaerobic digestion	53%	5.0	Dec 2014
Merlin Renewables	UK (Eng)	Anaerobic digestion	49%	5.0	Dec 2013
Peacehill Farm	UK (Scot)	Anaerobic digestion	49%	5.0	Dec 2015
Rainworth Energy	UK (Eng)	Anaerobic digestion	100%	5.0	Sep 2016
Vulcan Renewables	UK (Eng)	Anaerobic digestion	49%	5.0	Oct 2013
Warren Energy	UK (Eng)	Anaerobic digestion	49%	5.0	Dec 2015
Amber	UK (Eng)	Solar	100%	9.8	Jul 2012
Branden	UK (Eng)	Solar	100%	14.7	Jul 2013
CSGH	UK (Eng)	Solar	100%	33.5	Mar 2014 & Mar 2015
Monksham	UK (Eng)	Solar	100%	10.7	Mar 2014
Pylle Southern	UK (Eng)	Solar	100%	5.0	Dec 2015
Codford Biogas	UK (Eng)	Waste anaerobic digestion	100%	3.8	2014
Bio Collectors	UK (Eng)	Waste anaerobic digestion	100%	11.7	Dec 2013
Cramlington Renewable Energy Developments	UK (Eng)	Biomass combined heat and power	100%	32.0	2018
Energie Tecnologie Ambiente (ETA)	Italy	Energy-from-waste	45%	16.8	2012
Northern Hydropower	UK (Eng)	Hydropower	100%	2.0	Oct 2011 & Oct 2017
Yorkshire Hydropower	UK (Eng)	Hydropower	100%	1.8	Oct 2015 & Nov 2016
Other energy infrastructure
West Gourdie	UK (Scot)	Battery storage	100%	n/a	May 2023
Clayfords	UK (Scot)	Battery storage	50%	n/a	Pre-construction
Sandridge	UK (Eng)	Battery storage	50%	n/a	Under construction
Asset	Location	Type	Ownership	Capacity(MW)	Commercial operations date
CNG Fuels	UK (Eng)	Low carbon transport	Minority2	n/a	Various
Sustainable resource management
Glasshouse	UK (Eng)	Controlled environment	10%	n/a	Mar 2025
Rjukan	Norway	Controlled environment	25%	n/a	Early stage operations
ELWA	UK (Eng)	Waste management	80%	n/a	2006
Tay	UK (Scot)	Wastewater treatment	33%	n/a	Nov 2001

Source: FGEN, Marten & Co. Note 1) excludes projects in FEIP’s portfolio. Note 2) FGEN holds 25% of CNG Foresight Holdings Ltd, which owns 60% of the shares in CNG Fuels Ltd (FGEN look-through interest 15%) and holds £150.15m in 10% preferred return investments issued by CNG Fuels (FGEN interest £37.5m).

As part of FGEN’s re-focus on core environmental assets, its three growth assets – the two controlled environment projects (the Glasshouse and Rjukan) and the CNG portfolio – will be sold over the medium term once operations have ramped up and their valuation uplifts booked. We profiled all three in our previous note, a link to which can be found on page 16.

The valuation of Rjukan asset rose as it transitions from construction to operational

All three assets have progressed in line with the manager’s expectations. The value of the Rjukan land-based trout farm in Norway rose as it transitioned from construction to early-stage operational, with the first harvest and sales in the summer. As such, it moved from being valued at cost to DCF method, and increased in value by £2.9m over six months. FGEN’s manager says the valuation will increase further as operations are ramped up.

Operations at CNG Fuels also grew, with volumes of gas dispensed (+15%), truck numbers (+18%) and pricing (+21%) all up significantly over the year. This contributed to a £2.2m uplift in value for the asset.

Meanwhile, the Glasshouse secured further sales and market penetration, with customers now including six of the eight largest clinics in the UK. The business target is being cash flow break-even in the new year, ahead of a full ramp-up by 2026/27.

Portfolio activity

FGEN sold its stake in a BESS project and is considering options on another BESS asset

There has been very little activity in the way of acquisitions and disposals since our last note in July. However, FGEN did sell its 50% stake in its Lunanhead battery energy storage (BESS) project for £1.25m, in line with book value, in August. The sale was made in preference to making a follow-on investment in the project. The manager says that it is continuing to explore options for the Clayfords BESS asset, in which it owns a 50% stake.

The company made several follow-on investments over the six months totalling £7.9m, including into the CNG platform and into Vulcan Renewables.

FGEN’s solar assets exceeded generation targets by 6.2% in the period, but was offset by disappointing performance of its wind assets, which was 6.5% below target. FGEN’s largest asset, the Cramlington biomass scheme (which accounts for 9% of portfolio value), generated 44.3% below target in the six months to the end of September, due to a six-week extension of a planned outage in July. FGEN’s manager has advanced a liquidated damages claim with the O&M contractor and expects the shortfall to reduce to 9.5% once the minimum expected compensations are received.

Performance

FGEN’s NAV returns over the past three years have been flat, despite substantial headwinds that it and the renewable energy infrastructure sector have faced over the period contributing to portfolio valuation declines. Robust portfolio revenues have allowed for a progressive dividend distribution, which has offset the fall in asset value.

Figure 11: FGEN NAV TR over five years to 30 September 2025

Source: Bloomberg, Marten & Co

Figure 12: FGEN cumulative performance to 30 September 2025

	3 months (%)	6 months (%)	1 year (%)	3 years (%)	5 years (%)
FGEN NAV total return	2.0	2.1	2.7	1.9	52.4
FGEN share price total return	(10.5)	2.7	(14.6)	(24.8)	(14.8)

Source: Bloomberg, Marten & Co

Peer group

Figure 13: AIC renewable energy infrastructure sector comparison table, as at 15 December 2025

	Market cap (£m)	Premium/(discount) (%)	Yield(%)	Ongoing charge (%)
FGEN	422	(35.3)	11.8	1.24
Aquila Energy Efficiency	20	(46.1)	0.0	3.80
Aquila European Renewables Income	121	(38.3)	14.1	1.10
Bluefield Solar Income	401	(41.1)	13.2	1.02
Ecofin US Renewables Infrastructure	21	(50.3)	2.3	2.30
Foresight Solar	358	(38.7)	12.5	1.17
Gore Street Energy Storage Fund	272	(40.2)	13.0	1.38
Greencoat Renewables	683	(30.4)	9.7	1.18
Greencoat UK Wind	2,106	(31.5)	10.6	0.95
Gresham House Energy Storage	461	(30.4)	6.8	1.29
Hydrogen Capital Growth	19	(59.0)	0.0	2.53
NextEnergy Solar	291	(42.9)	16.7	1.18
Octopus Renewables Infrastructure	314	(39.8)	10.4	1.21
SDCL Efficiency Income	572	(40.9)	12.0	1.16
The Renewables Infrastructure Group	1,651	(36.9)	10.8	1.04
US Solar Fund	79	(45.2)	10.1	1.54
VH Global Energy Infrastructure	249	(41.4)	9.2	1.50
Peer group median	314	(40.2)	10.6	1.21
FGEN rank	6/17	4/17	7/17	10/17

Source: QuotedData website

You can access up-to-date information on FGEN and its peers on the QuotedData website.

FGEN has one of the broadest remits of the 17 companies that comprise the members of the AIC’s renewable energy sector. Most of these funds are focused on solar or wind or some combination of the two. Two of these funds are focused solely on energy storage. There is variation of geographic exposure within the peer group too, with a number of funds that are heavily exposed to the North American market (which has a different risk/reward structure).

The sector has been shrinking over the past 12 months through a combination of private acquisitions (taking advantage of the wide discounts in the sector) or through managed wind-downs. We have lost Downing Renewables & Infrastructure since our last note, while Aquila Energy Efficiency and Hydrogen Capital Growth are in a managed wind-down. Meanwhile, Bluefield Solar Income put itself up for sale in November after shareholders voted against a proposal for it to merge with its manager, Bluefield Partners.

The proposed merger of The Renewables Infrastructure Group (TRIG) and infrastructure trust HICL Infrastructure (which are both managed by InfraRed Capital) was abandoned in early December after a HICL shareholder revolt. TRIG is facing a continuation vote in 2026.

FGEN is one of the larger funds within this peer group. Whilst its discount is narrower than most, the whole sector derated following the government proposals on bringing forward a change in the inflation measure on ROs and FITs. Wide discounts have distorted yields across the sector. Nevertheless, FGEN’s yield is highly attractive, with coverage of 1.22x. Its ongoing charges ratio ranks middle of the pack, but is expected to fall when the impact of a reduction in the management fee is felt.

Figure 14: AIC renewable energy infrastructure sector NAV total return performance comparison table, as at 1 December 2025

	1 year(%)	3 years(%)	5 years(%)	10 years(%)
FGEN	2.7	0.6	8.8	7.3
Aquila Energy Efficiency	(19.3)	(7.1)	–	–
Aquila European Renewables Income	(28.3)	(14.5)	(5.7)	–
Bluefield Solar Income	(2.8)	(0.5)	6.8	7.8
Ecofin US Renewables Infrastructure	(39.9)	(25.1)	–	–
Foresight Solar	(2.4)	(0.5)	8.3	7.1
Gore Street Energy Storage Fund	(6.0)	(0.7)	4.7	–
Greencoat Renewables	3.6	4.2	5.9	–
Greencoat UK Wind	(5.0)	9.3	9.7	9.4
Gresham House Energy Storage	6.1	(6.7)	6.7	–
Hydrogen Capital Growth	(59.1)	(24.4)	–	–
NextEnergy Solar	(0.7)	(2.9)	5.3	5.6
Octopus Renewables Infrastructure	0.8	1.8	5.5	–
SDCL Efficiency Income	1.9	(0.4)	2.8	–
The Renewables Infrastructure Group	(3.7)	(0.9)	5.4	7.4
US Solar Fund	(16.5)	(11.2)	(3.0)	–
VH Global Energy Infrastructure	1.5	3.5	–	–
Peer group median	(2.8)	(0.7)	5.5	7.3
FGEN rank	3/17	5/17	2/13	4/6

Source: QuotedData website

Premium/(discount)

FGEN’s discount had been narrowing from all-time lows at the start of this year; however, the government proposals to bring forward the change in the inflation measure for incentives saw the discount widen (along with the wider peer group).

Over the year to 30 September 2025, FGEN’s shares traded in range of a 17.4% and a 38.8% discount to NAV, and averaged a discount of 28.6%. FGEN’s discount at 15 December 2025 was wider than its 12-month average at 35.3%.

Figure 15: FGEN premium/(discount) (%) over five years to 30 September 2025

Source: Bloomberg, Marten & Co

Fund profile

Further information can be found at FGEN.com

FGEN invests in a diversified portfolio of private infrastructure assets that deliver stable returns, long-term predictable income, and opportunities for growth while supporting the drive towards decarbonisation and sustainable resource management.

FGEN invests in three core areas of environmental infrastructure: renewable energy generation, other energy infrastructure, and sustainable resource management. Renewable energy generation investments include wind, solar, AD, biomass, energy from waste, and hydropower. Other energy infrastructure assets include battery energy storage and low carbon transport. Sustainable resource management includes wastewater, waste processing, and sustainable solutions for food production such as agri- and aquaculture-controlled environment projects.

FGEN’s portfolio is diversified across complementary sectors, technologies and geographies which substantially de-risks it from exposure to fluctuations in weather patterns and helps differentiate the company from its peers.

FGEN’s mandate allows it to invest in emerging areas of environmental infrastructure, provided that they are sufficiently mature and display strong infrastructure characteristics.

FGEN’s AIFM is Foresight Group LLP (Foresight). Foresight is one of the best-resourced investors in renewable infrastructure assets, with £13.6bn of AUM at 30 September 2025. This includes Foresight Solar Fund, which sits in FGEN’s peer group. Foresight has a highly experienced and well-resourced global infrastructure team with 185 infrastructure professionals managing around 5.0GW of energy infrastructure. It is a global business, with offices in seven countries. The co-lead managers for FGEN are Chris Tanner, Edward Mountney and Charlie Wright.

SWOT analysis and bull vs bear case

Figure 16: SWOT analysis for FGEN

Strengths	Weaknesses
Continued robust revenues from core portfolio	Sensitive to market sentiment and interest rate volatility
Progressive dividends, with comfortable coverage by income
Opportunities	Threats
Valuation uplifts from growth assets moving to fully operational	Potential discount widening with Option 2 of government proposal
35%+ discount to NAV could narrow if sentiment improves and interest rates fall

Source: Marten & Co

Figure 17:    Bull vs bear case for FGEN

Aspect	Bull case	Bear case
Performance	Capital appreciation of growth assets as operations ramp up. Core portfolio continues to produce strong cash flows	Growth assets take longer than anticipated to become fully operational. Energy prices dive, impacting income streams
Dividends	Strong track record of increases, which the board are committed to continuing	Increases potentially not sustainable if conditions change
Outlook	Structural increase in renewable energy demand looks set to continue	Government scales back climate commitments
Discount	FGEN’s wide discount could narrow as interest rates subside and sentiment towards the sector turns positive	The discount could widen further due to detrimental government proposals

Source: Marten & Co

IMPORTANT INFORMATION

This marketing communication has been prepared for Foresight Environmental Infrastructure Plc by Marten & Co (which is authorised and regulated by the Financial Conduct Authority) and is non-independent research as defined under Article 36 of the Commission Delegated Regulation (EU) 2017/565 of 25 April 2016

I’ve bought back for the Snowball 8802 shares in TFIF Twenty Four Income Fund for 10k.

With the UK stock market closing over the Xmas and New Year period, I would prefer to be making a small contribution to the Snowball rather than the cash sitting in the account earning nothing. All baby steps.

Current yield 8% which could be enhanced if they pay a higher dividend in April, trading at a small premium to their NAV.

Next xd in January for 2p

I’ve sold SEIT xd for a profit of £221.00

The 2026 Bond Boom: 6 Funds Paying Up to 14.9%

Brett Owens, Chief Investment Strategist

2026 is shaping up to be the best year for bond investors in many years. Washington wants rates down, housing up and borrowing cheap again.

This wish list is wildly bullish for bonds.

Fed Chair Jay Powell has delivered two rate cuts to end the year, with more to follow. Whether or not Powell personally delivers them doesn’t matter to us. Powell is on his way out. But the Fed show will go on, with a ringmaster ready to roll.

President Trump has confirmed his shortlist for the next Fed Chair is down to “The Two Kevins”: Kevin Hassett and Kevin Warsh.

The implication for bond investors is the same, regardless of which Kevin gets the nod:

• Kevin Hassett, the “cut early, cut often” candidate, has spent 20 years arguing the Fed moves too slowly. He knows the assignment: Cut!
• Kevin Warsh, a historic hawk, has aligned himself with Trump’s mandate. He told the President personally that borrowing costs must come down.

Whichever Kevin gets the job, the result is already in the cards. More cuts are coming.

This “Kevin accommodation” is the catalyst our bond funds have been waiting for. PIMCO and DoubleLine don’t just buy bonds for their closed-end funds (CEFs)—they borrow money to buy more bonds.

This is called leverage. For the last three years, high rates made leverage a dead weight on these funds. In 2026, falling rates will burn that weight like rocket fuel. Every quarter-point cut lowers the funds’ borrowing bill and widens the spread between what they pay and what their portfolios earn.

The “pure plays” on lower borrowing costs are PIMCO Dynamic Income (PDI) and PIMCO Dynamic Income Opportunities (PDO). With more leverage than your typical bond fund, PDI and PDO have felt high rates more acutely than their peers.

They will be happy to see either Kevin in action and experience the relief of falling rates. PDI and PDO have been paying 5-6% on their credit lines. Cutting back towards 3-4% restores the profitability these funds enjoyed in their late 2010s bull run.

PIMCO is the 800-pound gorilla when it comes to bond trading. They don’t just buy bonds; they bully the market. PDI yields a massive 14.9% and uses 32% leverage. Yes, it has been paying the price for high rates, but now it is ready to run, thanks to Fed cuts. Its younger sibling PDO, meanwhile, employs 35% leverage and yields 11%. Not shabby!

If PIMCO is the bond bully, then Jeffrey Gundlach is the fixed-income sniper. The “Bond God” isn’t afraid to buy “unloved” assets for DoubleLine Income Solutions (DSL). His edge is simple: when emerging-market debt gets dumped, he buys it at 60-70 cents on the dollar and clips big yields while he waits for appreciation.

As the US dollar softens further from falling rates, these global bonds are positioned to bounce. They act as a high-yield hedge to greenback weakness. DSL yields 11.7% while its more conservative sister fund DoubleLine Yield Opportunities Fund (DLY) pays 9.6%. They use 22% and 15% leverage respectively—conservative numbers.

Speaking of a softer dollar, AllianceBernstein Global High Income (AWF) is a direct play on it. The fund owns high-income debt from around the world. In a falling-rate environment, the dollar typically weakens—making AWF’s foreign-bond income worth more when converted back into dollars. It’s a nice currency kicker on top of a 7.3% yield.

Finally, Muni Bondland is the place for leverage. Safe muni bonds take advantage of the security in their sector by borrowing to buy more. The leverage ratio for Nuveen Municipal Credit Income (NZF) is 41%, so this fund is about to save big time:

Plus, that 7.5% yield from NZF gets a tax “hall pass” from Uncle Sam. For a top-bracket taxpayer, that 7.5% tax-free income is worth 12.6% in taxable terms. It’s essentially an S&P-beating return from safe muni bonds.

With 12% to 14.9% yields in hand, we don’t need to chase AI moonshots or sweat over quarterly earnings reports. Retirement is no longer a spreadsheet problem. We just need to buy the right bonds before vanilla investors realize the leverage game has flipped.

When we can lock in 14.9% yields, our retirement math gets very simple.

Funds like these are the secret to retiring on as little as $500K. Let’s face it, the traditional “safe” income strategies touted by Wall Street are broken with the Fed cutting rates. Policy changes are gutting retirement plans. Which is why we are turning to the only reliable retirement solution—a “no withdrawal” portfolio that helps us retire on $500K

The Retirement Strategy That’s Failing Millions—Even the Ones Who “Did Everything Right”

In this exclusive briefing, you’ll discover:

• Why “safe” income strategies are failing right now
• How inflation, fluctuating yields and policy chaos are gutting retirement plans
• The hidden risk that quietly drains retirement accounts (and how to avoid it)
• A contrarian dividend blueprint yielding up to 11%—without touching principal
• How to turn $500K into a stable income stream that could last decades

Dear Reader,

You saved. You invested. You followed the “rules.”

And yet here you are—uneasy.

Wondering if you really can afford to retire. Or stay retired.

And who could blame you?

One minute, inflation’s the threat. The next, it’s recession.

A new headline from Washington sends markets whipsawing the very same day.

And the broader economy? It’s bloated with debt and only getting worse.

We touch new all-time highs, then the market zigzags like a drunk squirrel—making it feel impossible to plan, let alone sleep at night.

So you start looking for stability. Maybe trim a position here. Tap a bit of principal there. Just for now.

But that’s exactly how it begins.

And once you start selling shares to supplement your income, you’re on a slippery slope.

A slow-motion wealth drain most retirees don’t realize they’re in—until it’s too late.

I call it…

The Share Selling “Death Spiral”

Some financial advisors (who are not retired themselves, by the way) say that you can safely withdraw and spend, say, 4% of your retirement portfolio every year. Or whatever percentage they manipulate their spreadsheet to say.

Problem is, in reality, every few years you’re faced with a chart that looks like this.

Apple’s Dividend Was Fine – Its Stock Wasn’t

As you can see, the dividend (orange line above) is fine — growing, even — but you’re selling at a 25% loss!

In other words, you’re forced to sell more shares to supplement your income when they’re depressed.

Remember the benefits of dollar-cost averaging that built your portfolio? You bought regularly, and were able to buy more shares when prices were low?

In this case, you’re forced to sell more shares when prices are low.

When shares rebound, you need an even bigger gain just to get back to your original value.

The Only Reliable Retirement Solution

Instead of ever selling your stocks, you should instead make sure you live on dividends alone so that you never have to touch your capital.

This is easier said than done, and obviously the more money you have, the better off you are. But with yields still pretty low, even rich folks are having a tough time living off of interest today.

And you can actually live better than they can off of a (much) more modest nest egg if you know where to look for lesser-known, meaningful and secure yield.

I’m talking about annual income of 8%, 9% or even 10%+ so that you’re banking $50,000 (and potentially more) each year for every $500,000 you invest.

You and I both know an income stream like that is a very nice head start to a well-funded retirement.

And it’s totally scalable: Got more? Great!

We’ll keep building up your income stream, right along with your additional capital.

And you’ll never have to touch your nest egg capital – which means you won’t have to worry about or running out of money in retirement, or even the day-to-day ups and downs of the stock market.

The only thing you need to concern yourself with is the security of your dividends.

As long as your payouts are safe, who cares if your stock prices swing up or down on a given day?

Most investors know this is the right approach to retirement.

Problem is, they don’t know how to find 8%, and 10% yields to fund their lives.

And when they do find high yields, they’re not sure if these payouts are safe. Will the company or fund have enough cash flow to pay the dividends into the future?

And how sensitive are these payouts to the latest headline, Fed policy change or unrest on the other side of the globe?

We’ll talk specific stocks, funds and yields in a moment.

But first, a bit about myself.

My name is Brett Owens. I first started trading stocks in college, between classes at Cornell.

I graduated cum laude with an industrial engineering degree — which is actually pretty popular with Wall Street recruiters.

But I couldn’t stand the thought of grinding it out in a cubicle for 80 hours a week. So I moved to San Francisco and got into the tech scene.

A buddy and I started up two software companies that serve more than 26,000 business users.

The result was a nice chunk of change coming in … and I had to decide what to do with my money.

I had seen plenty of young “techies” come into sudden cash and burn through their windfall in a year, ending up right back where they started.

That was NOT going to be me. I already had dreams of living off my wealth one day, decades before I retired.

I got plenty of cold calls from brokers wanting to “help” me. But I knew that nobody would care as much about my money as me.

So I went out on my own and invested my startup profits in dividend-paying stocks.

I’ve been hunting down safe, stable and generous yields ever since, growing my wealth with vehicles paying me 8%, 9%, even 10%+ dividends.

Over the past 10+ years, I’ve been writing about the methods I use to generate these high levels of income.

Today I serve as chief investment strategist for Contrarian Income Report — a publication that uncovers secure, high-yielding investments for thousands of investors.

Since inception, my subscribers have enjoyed dividends 5 times (and much more!) the S&P 500 average, plus big annualized gains!

And that brings me to a crucial piece of advice…

The ONE Thing You Must Remember

If I could leave you with just one nugget of investing wisdom today, it would be to NEVER overlook the incredible wealth-building power of dividends.

Few investors realize how important these unglamorous workhorses actually are.

Here’s a perfect example…

If you put $1,000 in the dividend-paying stocks of the S&P 500 back in 1973, you would have had $96,970 by 2023, or 97x your money.

But the same $1,000 in the non-dividend payers would have grown to just $8,990 — 91% less.

That’s why I’m a dividend fan.

The stock market is a fantastic wealth-building machine, but it doesn’t always go straight up!

There have been plenty of 10-year periods where the only money investors made was in dividends.

And that’s what gives us dividend investors such an edge.

When you lock in an 8%+ yield, you’re booking an income stream that’s bigger than the stock market’s long-term average return right off the bat.

Of course you can’t just buy every ticker symbol out there with a flashy yield, or you’ll get burned pretty fast.

So let’s wipe the false promises of mainstream finance from our minds and start thinking the “No Withdrawal” way…

Step 1: Forget “Buy and Hope” Investing

Most half-million-dollar stashes are piled into “America’s ticker” SPY.

The SPDR S&P 500 ETF (SPY) is the most popular symbol in the land. For many 401(K)’s, this is all there is.

And that’s sad for two reasons.

First, SPY yields just 1.1%. That’s $5,500 per year on $500K invested… poverty level stuff.

Second, consider 2022 for a moment (and only a moment, I promise!).

SPY was down nearly 20% that year. That is no bueno, because that $500K would have been reduced to $400K.

The last thing we want to do is lose the money we’re getting in dividends (or more) to losses in the share price. Which is why we must protect our capital at all costs.

Step 2: Ditch 60/40, Too

The 60/40 portfolio has been exposed as senseless.

Retirees were sold a bill of goods when promised that a 60% slice of stocks and 40% of bonds would somehow be a “safe mix” that would not drop together.

Oops.

Inflation — plus an aggressive Federal Reserve, plus a (thus far) persistently steady economy — drop-kicked equities and fixed income before they went on a serious bull run in 2023, 2024 and into 2025 (with a brief interruption for the April “tariff tantrum.”)

It just goes to show that bonds are not the haven guaranteed by the 60/40 high priests. They could easily plunge just as hard (or harder) than stocks in the next economic crisis.

Just like they did in 2022 (sorry, we’re only going to spend one more second on that disaster of a year). US Treasuries plunged, which resulted in the iShares 20+ Year Treasury Bond ETF (TLT) getting tagged.

Sure, it still paid its dividend. But even including payouts, the fund was down 31% — worse than the S&P 500. Ouch!

When stocks and bonds are dicey, where do we turn? To a better bet.

A strategy to retire on dividends alone that leaves that beautiful pile of cash untouched.

Step 3: Create a “No Withdrawal” Portfolio

My colleague Tom Jacobs and I literally wrote the book on a dividend-powered retirement.

In How to Retire on Dividends: Earn a Safe 8%, Leave Your Principal Intact, we outline our “no withdrawal” approach to retirement:

1. Save a bunch of money. (“Check.”)
2. Buy safe dividend stocks with big yields
3. Enjoy the income while keeping the original principal intact.

To make that nest egg last, and our working life worthwhile, we really need yields in the 7% to 10% range. We typically don’t see these stocks touted on Bloomberg or CNBC, but they are around.

Of course, there are plenty of landmines in the high-yield space. Some of these stocks are cheap for a reason. Which is why we need to be contrarian when looking for income.

We must identify why a yield is incorrectly allowed to be so high. (In other words, we need to figure out why the stock is priced so cheaply!)

As I write, the top 10 payers in my Contrarian Income Report portfolio yield about 10.6% on average.

On every million dollars invested, this dividend collection is spinning off an incredible $106,000 every single year!

And you don’t have to be a millionaire to take advantage of this strategy.

A $750k nest egg will generate $79,500 annually…

$500K could hand you $53,000…

You get the idea.

The important thing is that these yields are safe, which creates stability for the stock (and fund) prices attached to them.

We want our income, with our principal intact.

It’s really the only way to retire comfortably, without having to stare at stock tickers all day, every day.

Now, many blue-chip yields are reliable. They just need to hit the gym and bulk up a bit. Here’s how we take perfectly good, yet modest, dividends and make them into braggarts.

Step 4: Supersize Those Yields

Mastercard (MA) is a near-perfect dividend stock. Its payout is always climbing, having nearly doubled over the last five years. (MA shareholders, you can thank every business that accepts Mastercard for your “pennies on every dollar” rake.)

Tap, tap, tap. Remember cash? Me neither. Another 2020 casualty, with Mastercard making a few dimes or dollars on every plastic transaction.

The cashless trend has been in motion for years. But international growth prospects remain huge. Just a few years ago, 80%+ of transactions in Spain, Italy and even tech-savvy Japan were in cash.

We expect more dividend hikes as more cash turns to plastic. Or skips plastic entirely and goes straight to e-transfers. Mastercard and close cousin Visa (V) nab a nice piece of that action, too.

The only chink in MA’s armor? Everyone knows it is a dynamic dividend stock. So it only yields 0.5%. Investors keep bidding it higher, knowing that the next dividend raise is just around the corner.

So, the compounding of those hikes makes MA a great stock for our kids and grandkids. You and I, however, don’t have the time to wait for 0.5% to grow. And $2,500 on a $500K investment simply won’t get it done.

Let’s instead consider top-notch closed-end fund (CEF) Gabelli Dividend & Income Trust (GDV), managed by legendary value investor Mario Gabelli.

Mastercard is one of Gabelli’s largest holdings. But we income investors would prefer GDV because it boasts a healthy dividend right around 6.4%, paid monthly, nearly 13 times what Mastercard pays (and this is low in CEF-land; other funds, like the next one we’ll talk about, pay nearly double that).

And as I write this, thanks to the conservative folks who buy CEFs, we have a rare opportunity to buy Mario’s portfolio for just 89 cents on the dollar.

Yup, GDV trades at an 11% discount to its net asset value, or NAV. It’s a way to boost MA’s payout and snag a discount, too.

Where does this discount come from?

CEFs are like their mutual fund cousins, with one exception: they have fixed pools of shares, so they can (and do) trade higher and lower than their NAVs, or “fair” values (the value of their holdings minus any debt).

As contrarians, we can step in when they are temporarily out of favor, like after a pullback, when liquidity is low, and buy them at generous discounts.

GDV holds more blue-chip dividend payers alongside MA, such as American Express (AXP), Microsoft (MSFT) and JPMorgan Chase & Co. (JPM). And with GDV, we have an opportunity to purchase them at an 11% discount.

These high-quality stocks wouldn’t normally qualify for our “retire on $500K” portfolio because everyone in the world knows they are strong long-term investments.

Even though these companies are constantly raising their dividends, constant demand for their shares keeps their prices high (and current yields low). So they never meet our current-yield requirement.

GDV does. The fund pays a monthly dividend that adds up to a nice 6.4% annual yield.

Let me give you one more idea (and this is where that much larger payout comes in): the Eaton Vance Tax-Managed Global Diversified Equity (EXG) is another CEF with a similar blue-chip dividend portfolio.

But EXG generates even more income than GDV by selling covered calls on the shares it owns.

More cash flow means a bigger dividend — and EXG pays an already terrific 8.9%!

So we buy and hold EXG and GDV forever, collecting their monthly dividends merrily along the way? Not quite.

In bull markets, these funds are great. But in bear markets, they’ll chew you up.

Step 5: Protect That Principal!

My CIR readers will fondly recall the 15 months we held GDV and EXG together, collecting monthly dividends plus price gains that added up to 43% total returns.

What was happening in that period, from October 2020 until February 2022? The Federal Reserve was printing money like crazy. Not only did the Fed stoke inflation, but we also enjoyed an asset-price lift.

Starting in 2022, we had the opposite situation. The stock market was topping, and we didn’t want to fight the Fed. We sold high, and by late 2022, both funds were down sharply:

We Sold EXG and GDV Just Before They Plunged

For whatever reason, “market timing” is a taboo phrase among long-term investors. That’s a shame because it is quite important.

By aligning our dividends with the market backdrop, we can protect our principal from bear markets.

Step 6: Start Here to Retire on $500K

So if the “tried and true” money advice — like the 60/40 portfolio and the 4% rule — has been properly exposed as broken…

Where do we go from here?

Well, imagine your portfolio in just a few days or weeks from now spinning off 8%, 9% and even double-digit dividends with the reliability of a Swiss watch… with many of my recommendations paying every single month no less!

No more worrying how much is coming in next month.

No more worrying about the Fed’s next move. Or the next inflation or jobs report.

No more worrying about outliving your nest egg.

Let me tell you more about my solution — what I call the 11% “No-Withdrawal Portfolio.”

Better yet, I want to give you the names of my favorite stocks and funds to buy right now…

Yields Up to 11%, With Upside

To make it easy to transition into this new way of investing… where you are buying “bird in the hand” cash flows… instead of stocks that you just hope will go up… I’ve prepared two in-depth guides that hone in on the strategies I mentioned above…

Special Report #1:

Monthly Dividend Superstars: Yields Up to 11%, With Double-Digit Upside

This is where you’ll find the bargains that investors are leaving on the table in their misplaced fear of the Fed.

Inside you’ll find the ticker symbol, my buy-up-to price and in-depth backstory on my three favorite CEFs:

• A well-hedged 11% payer in one of the most in-demand sectors right now,
• The brainchild of one of the top fund managers on the planet, throwing off an amazing 9.2% yield,
• And a rock-steady 7.1% dividend whose managers have guided it to an astonishing 1,500% total return since inception.

Special Report #2:

The Perfect Income Portfolio

In this guide, you’ll get all the details of what I call the “Perfect Income Portfolio.”

Step-by-step, I’ll show you exactly how to set up your portfolio for maximum income without taking on additional unnecessary risk.

And, if you follow the simple steps laid out, I’m confident you’ll be able to enjoy an income stream that far exceeds what most folks who buy the typical S&P 500 stock earn.

This report includes investments that have passed my strict due-diligence process—including one of the best ways I’ve ever seen to invest in utilities (which I’ve picked for strong gains as interest rates move lower).

This fund pays a rich 7% today, holds some of the strongest electrical utilities in the country and trades at a bargain valuation (even though most investors don’t realize it). Its bargain status won’t last as rates inevitably tilt lower, pulling more investors toward its healthy payout!

I’ll walk you through each recommendation, giving you a clear, concise and easy-to-understand breakdown of exactly why I see these as “perfect” income plays.

How to Get Both Reports Absolutely Free

To access both reports, Monthly Dividend Superstars and The Perfect Income Portfolio, at no cost whatsoever, I simply ask that you take a risk-free trial of my research service, Contrarian Income Report.

I created Contrarian Income Report to help investors uncover overlooked and underappreciated income plays before Wall Street and the mainstream herd bid them up.

People often ask me, “I get the income part, but where does ‘contrarian’ fit in?”

My answer is simple: You’ll never beat the market by following the herd.

If you buy the same investments as everyone else, you’re going to have the same results as other people — which are always mediocre. This is why my advisory is defiantly contrarian.

It all boils down to one simple principle: If you want to make money, really big money, do what nobody else is doing.

Contrarian investing is probably the simplest, sanest, most powerful and reliable money-making technique ever devised to buy low and sell high. It works in any market, from stocks and bonds to gold and real estate — because human nature is the same everywhere.

You don’t need special training. All you need is an independent mind, a bit of patience and an ounce of courage.

If you want to buy low and sell high, you must force yourself to buy when everybody, including yourself, is feeling discouraged — when the news is bad. That’s likely to be the bottom. And you should sell when everybody is excited and the news is good, because that’s likely to be the top.

Right now, we’re holding a diverse collection of these high-yielding stocks and funds, and you’ll get instant access to each one the moment your no-risk trial starts.

And every new investment you get in Contrarian Income Report comes with a simple goal: it will pay a reliable 5% dividend — or better.

In fact, some holdings in our portfolio go way further than that, delivering 12%+ income right now.

So just by “swapping out” your anemic blue chips for these cash cows, you could double, triple — or even quadruple — your income. And you could do it TODAY!

That sort of money can upgrade your lifestyle in a hurry.

What are my retirement income options?

We’re all told to save into a pension, but there’s widespread confusion about how to take an income from our savings and investments at retirement, a new study has found. We look at your retirement income options.

By Laura Miller

What are my retirement income options?

(Image credit: Getty Images)

Retirement income today is rarely generated from a single source. It is typically built from a combination of the state pension, workplace or personal pensions, and other assets, each playing a different role.

Understanding how these different pension and non-pension income streams work – and the risks attached to each – can help you approach retirement with clearer expectations, financial advisers say.

Middle-aged Brits are sleepwalking into retirement without a plan, and time is running out, a survey has warned. Retirement income options are not being considered by 73% of 45-60 year olds, according to the study by pension provider LV.

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A third (33%) of respondents to the survey aged 45 to 60 said they are unaware of financial products or strategies available to help protect their retirement income or boost their pension savings.

Sue Allen, chartered financial planner at Chester Rose Financial Planning, said: “When you retire, one of the key questions is how you will take an income. Many people find they spend more at the start of retirement as they enjoy their newfound freedom and tick off bucket-list experiences.

“Once early retirement has passed, your spending may settle down, but you might also want to prepare for higher costs in your later years in case you need to pay for care. Setting out your retirement goals could help you understand how to create an income that suits your lifestyle at different points in time.”

We look at the different retirement income options – like the state pension, defined benefit pensions versus defined contribution pensions, workplace pension and SIPPs as well as annuities, cash savings accounts, ISAs and property rental income – and how they can work together to fund your later years.

State pension – a baseline income

The state pension provides a guaranteed, inflation-linked income for life and forms the baseline of retirement income for most people.

The full new state pension (for most post-2016 retirees) is now £230.25 per week for 2025/26, or £11,973 per year, while the full basic state pension (for those born before April 1953) is £176.45 weekly – amounting to £9,175.40 a year – both increased under the triple lock, with payments made every four weeks.

Eligibility and amounts depend heavily on National Insurance contributions, requiring 35 years for the full new state pension and around 30 for the basic. You can begin claiming the state pension at 66, but the state pension age is rising.

Jude Dawute, managing director at financial advice firm Benjamin House, said: “While it provides an important level of security, the state pension on its own is generally designed to meet basic living costs, rather than support a broader retirement lifestyle.”

Pensions UK, a trade body, estimates a single person household needs £13,400 a year post-tax income to cover the basics in retirement – excluding housing costs – so while most of this will be covered by the new state pension, some other savings or income will be needed besides.

Defined benefit pensions – predictable income

Defined benefit (DB) pensions provide a pre-determined income for life, usually payable from a scheme’s normal retirement age (commonly 60 or 65). The income is not affected by market movements and continues for as long as you live. You can usually take 25% tax-free as a lump sum, with the rest of the income taxed at your marginal rate.

DB pensions are typically used to meet core, ongoing expenditure, because the income is known in advance and often includes inflation protection.

So if a person, aged 65, had a defined benefit pension paying £18,000 per year and gets the full new state pension of £11,973 per year, their total guaranteed retirement income would be £29,973 per year.

“This income would be paid regardless of investment conditions or how long the person lives, providing a stable base from which other retirement decisions could be made,” said Dawute.

Defined benefit pensions are usually inflexible regarding how income is taken and at what level. However, many allow a tax-free lump sum in exchange for lower income.

Allen, from Chester Rose Financial Planning, said: “The decision whether to take a tax-free lump sum or not needs careful consideration, as once taken, it cannot be reversed. In most cases, maximising guaranteed income is preferable unless the lump sum is genuinely required.”

Defined contribution pensions – flexibility and risk

Defined contribution pensions work differently to defined benefit pensions. Instead of providing a guaranteed income, they build up a pension pot, which can usually be accessed from age 55 (rising to 57), with no requirement to retire at a fixed age.

This flexibility allows income to be tailored to individual circumstances, but it also means retirees remain exposed to several risks.

“Unless funds are converted into guaranteed income – by buying an annuity – DC pensions remain invested. Their value can therefore rise or fall with markets,” Dawute said.

A key consideration is sequence risk, he pointed out. This is the impact of taking withdrawals during periods of poor market performance, particularly early in retirement.

Dawute said: “Losses at this stage can have a disproportionate effect on how long a pension pot lasts. Diversified portfolios can help manage volatility, but investment risk cannot be removed entirely.”

Consolidation, transfers and SIPPs

Many people reach retirement with multiple defined contribution pensions, built up over different jobs.

Consolidation brings these pensions together, often into a self-invested personal pension (SIPP) or a workplace pension scheme. This can make it easier to understand your overall retirement income, manage investments consistently, and plan withdrawals.

“In some cases, individuals may also explore pension transfers from older arrangements and defined benefit pensions into newer ones with greater flexibility,” said Dawute. But he added where protected benefits exist – like guaranteed income rates – these decisions require careful consideration.

Turning defined contribution pensions into income

Deciding how much to withdraw from your pension can seem like a balancing act and there are often many factors you need to consider.

Allen said: “For example, when you access your pension, you can usually take up to 25% as a tax-free lump sum. You might be tempted to withdraw the money to travel, renovate your home, or indulge your hobbies. However, withdrawing a lump sum at the start of retirement could affect your long-term finances.

“You don’t have to take a lump sum at the start of retirement to benefit from the tax-free money – you may spread it out over several withdrawals, for instance,” she said.

Option 1: Flexi-access drawdown – adaptable income with market exposure

Drawdown allows pension funds to remain invested while income is taken as needed. It is often used to support discretionary spending, such as travel or irregular expenses, and to keep funds accessible. You typically take your 25% tax-free cash upfront.

Drawdown income is not guaranteed and is exposed to:

• Market volatility
• Inflation risk if withdrawals rise faster than investment growth
• Longevity risk if withdrawals continue for longer than expected

When you are in drawdown the sequence of your investment returns is of vital importance. In the scenario shown below, which shows a retiree with a portfolio of £100,000, taking annual withdrawals of £5,000, their portfolio could be 22% worse off if they experienced losses in the first two years of retirement, compared to having these same losses in years four and five.

		Portfolio 1	Portfolio 2
Year	Withdrawal	Annual returns	Annual portfolio value (£)	Annual returns	Annual portfolio value (£)
1	£5,000	25%	£120,000	-25%	£70,000
2	£5,000	15%	£133,000	-15%	£54,500
3	£5,000	0%	£128,000	0%	£49,500
4	£5,000	-15%	£103,800	15%	£51,925
5	£5,000	-25%	£72,850	25%	£59,906

Source: Quilter. Table shows a 22% difference between portfolio 1 and portfolio 2 after five years

Option 2: UFPLS – simplicity and tax considerations

Uncrystallised funds pension lump sums (UFPLS) allow individuals to take payments directly from their pension, with 25% tax-free and 75% taxed as income each time, unlike flexi-access drawdown where the whole tax-free amount is usually taken upfront.

It’s a way to get money bit-by-bit without setting up a full drawdown plan, triggering the money purchase annual allowance (MPAA) on the first withdrawal and allowing the rest of your fund to keep growing.

UFPLS is commonly used for:

• One-off expenses
• Early retirement bridging until the state pension or other retirement income kicks in
• Smaller pension pots

Dawute said: “Because each withdrawal is taxed, timing and frequency can significantly affect your overall tax position.”

Option 3: Annuities – guaranteed income and annuity risk

An annuity converts pension savings into a guaranteed income, usually payable for life.

People often use annuities to cover essential spending, reducing reliance on investment markets and removing the risk of outliving their savings.

“However, annuities involve annuity risk – once an annuity is purchased, the income is typically fixed based on market conditions at that time and cannot be changed later,” said Dawute.

Inflation risk and annuities:

• Level annuities start at a higher income but lose purchasing power over time
• Inflation-linked annuities protect real income but begin at a lower level. This reflects a trade-off between higher initial income and longer-term protection against rising prices.

Other sources of retirement income

Drawing income from a range of assets can help diversify risk and improve financial resilience in retirement.

Matt Finch, director of wealth management at Bentley Reid, pointed to some non-pension assets that can boost your retirement income:

ISAs

“ISAs offer highly tax-efficient income, with withdrawals, income and growth free from tax. In many cases, it can be advantageous to utilise taxable income first to maximise allowances before drawing on ISA wealth,” said Finch.

Cash

Cash savings can provide liquidity and short-term security, reducing the need to sell long-term investments during periods of market volatility, he said.

Rental property income

Finch said: “Rental income can continue to provide a steady income stream in retirement, although it remains taxable and carries ongoing management responsibilities, which should be considered in the context of lifestyle objectives.”

Part-time work

“Part-time or consultancy work can offer a phased transition into retirement, maintaining income and reducing reliance on pensions in the early years,” he added.

Combining pension income streams

The most effective retirement income plans combine guaranteed income, flexible withdrawals and long-term growth, according to the experts.

Chartered financial planner Sue Allen said: “They are built around spending needs, health and attitude to risk – and are reviewed regularly as circumstances and tax rules change. Retirement income planning is not about finding the perfect product. It is about structuring your money so it supports the life you want for as long as you need it.”

A 65-year-old with a full state pension, NHS pension, a SIPP valued at £400,000 and an ISA of £100,000, who is continuing to work until 67, could have a retirement income portfolio that looks something like the below, she said.

In early retirement, income is topped up from the SIPP and ISA to support higher spending. Once the state pension and NHS pension payments begin, reliance on the SIPP reduces.

Later in life, income needs decline further, and guaranteed income covers most spending, while modest withdrawals continue to provide flexibility.

“The aim is not to maximise income early on but to keep the income sustainable and tax-efficient,” Allen said.

Age (years)	Income per year required (gross, i.e. before tax)
65-75	£60,000
75-85	£45,000
85-100	£30,000

Income source	Income per year (gross, i.e. before tax)
Part time work	£20,000
SIPP drawdown	£30,271 (assumed tax-free cash already taken)
ISA	£9,729
Total	£60,000

Income source	Income per year (gross, i.e. before tax)
State pension	£11,973
NHS pension	£15,000
SIPP drawdown	£23,771
ISA	£9,729
Total	£60,000

Income source	Income per year (gross, i.e. before tax)
State pension	£11,973
NHS pension	£15,000
SIPP drawdown	£18,000
Total	£45,000

The dividend total for the Snowball will be £11,621.00

Next years target remains 10k.

What might we learn from the ‘dot com’ era that we can apply to today’s markets ?

Alan Ray

Disclaimer

This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.

One of the profound differences between today’s investor and the investor of 25 years ago is that it is much easier today for us to imagine that a very large company can grow at extremely high rates than it was at the turn of the century. That statement may contradict many investors’ recollection, lived or otherwise, of what happened 25 years ago. After all, didn’t everyone’s imagination run wild, inventing new financial ratios to justify valuations that were absurd then and absurd today? Well, yes, if one focuses on the very narrow period of 1999 to 2000. But in the aftermath of the bubble bursting, perhaps embarrassed by our irrational exuberance, it took many of us years to get comfortable with the idea that a few very large companies could grow at a rate that had only been thought possible for a small business. The old ‘elephants don’t run’ adage was often recited, and for a sustained period after the bubble burst, investors in what came to be called ‘old economy’ businesses did much better than their ‘new economy’ counterparts. In the end though, investors grudgingly accepted that it was possible that a handful of large companies were ‘special’. And over time, it became increasingly meaningless to identify ‘old’ and ‘new’ economy companies as technology became ordinary and ubiquitous.

Indeed, long-time investors in the investment trust sector may recall that the transformation of Scottish Mortgage (SMT) to its status as a leading investor in high growth businesses took several years to complete. Whereas the manager at the time had arrived at the above conclusion early on, the process of persuading shareholders of what was a relatively traditional global equity trust took some time. What we have no trouble imagining today was, for many, a huge leap of faith.

Back in 1999, bankers were run ragged by dozens of new IPOs of increasingly outlandish businesses with no obvious route to profitability. These were eagerly bought by investors who wanted to own anything and everything that embraced the new technology of the day. This approach missed the vital point that many established businesses were transforming to embrace the internet but doing so at a measured pace and using their traditional brands and customer bases to anchor them while they made the transformation. For example, retail has been changed out of all recognition by the internet, but some ‘pre-internet’ brands have made a successful transition, learning from the mistakes of startup rivals. It’s taken the best part of a quarter of a century for the logistics and infrastructure that supports that transformation to catch up, and having existing ‘bricks and mortar’ has proved, for smart management teams, a bigger advantage than having the slickest website. For example, the resulting transformation of the property market is, today, a key theme in the portfolios of REITs such as Picton Property Income (PCTN) or Schroder Real Estate (SREI).

Today, bankers are less focused on IPOs and more on funding rounds for large private companies that are at the heart of the next wave of AI-related technology. We no longer have difficulty imagining that the eye-watering valuations of those companies will eventually be justified because we have all witnessed it happening before. It would be wrong to say that this is the sole focus of investors looking for AI ‘angles’, with businesses involved in the infrastructure behind power and data networks being a popular theme in many equity trusts, as one example. But in contrast to 1999, there are few high-profile IPOs presenting investors with absurd business models. At least, not yet.

So, while it is tempting, and quite sensible, to draw parallels to 1999/2000, there are some significant differences in what we know now compared to then. But once again we seem to have trouble imagining that the products and services that the same very large companies are developing might, if they are to succeed, transform the rest of the corporate world. The chart below shows how this lack of imagination is manifesting itself in stock market terms. This is the S&P 500 Index we are all familiar with plotted against the ‘equal weighed’ S&P 500 Index. For readers not familiar with the difference, while the S&P 500 Index weights each company according to its market cap, the ‘equal weight’ applies the same weight to every company. When a few very large companies perform well, the regular S&P 500 Index will perform well too, but the equal weighted version will perform less well. Which is exactly what has happened recently. As ever, we represent those indices in the charts using ETFs that track them, since those are real-world instruments that any investor can buy.

S&P 500 and S&P 500 EQUAL WEIGHTED

Source: Morningstar
Past performance is not a reliable indicator of future results

What this means is that we have a pattern where our ‘version 2.0’ imagination has no problem with future success for a handful of businesses, but this seems to be entirely at the expense of the rest of the market. For investors with a contrary nature or who are interested in the ‘only free lunch’ of diversification, this has the potential to be a very interesting opportunity. Again, we have no problem imagining that some of these large companies will get larger, but to do so they will need to provide products and services that others want to buy. Will all the other companies left behind in the index buy their products if they aren’t helpful to their business?

Speaking of diversification, to conclude the point on the two versions of the index, the next two charts show the sector exposure for the S&P 500 Index and its equal weighted neighbour. The largest ten constituents of the S&P 500 Index are about 40% of the overall index, which puts it right up there with active ‘focus’ funds in terms of its ‘conviction’. Technically, the equal weighted version doesn’t have ten largest constituents given the nature of its construction, although it’s likely one will find slight variations in position sizes for ETFs tracking the index. But one should expect any ten holdings to add up to 3% or less of the total. It’s also worth noting that US equities are over 70% of world indices, so even those investors who prefer global over US-specific trusts will likely find they are experiencing a similar concentration risk.

The first of the two charts shows the sector exposure for the equal weight index and is, perhaps, a good representation of what, in our imagination, the US equity market looks like.

S&P 500 EQUAL WEIGHTED SECTOR EXPOSURE

Source: Morningstar

The second chart, the market cap weighted index we are all familiar with, shows in sector terms just how concentrated things have become in the US market. And again, global indices will be subject to the same influence.

S&P 500 SECTOR EXPOSURE

Source: Morningstar

In the investment trust world, there are a couple of good mainstream ways to alleviate concentration risks in respect of US equities. First, JPMorgan American (JAM) deservedly holds the status as the leading ‘core’ US equity trust, combining elements of large-cap growth and value, together with a smaller (<10%) combination of small-cap growth and value, to achieve a more balanced mix of the US’s leading companies, including some of those mega-cap names. By dint of its equity income mandate, North American Income (NAIT) provides a very different set of exposures. Whereas its mandate is by no means akin to the ‘equal weight’ index, it’s very interesting that, as the chart below shows, an active mandate that is naturally underweight those mega-cap growth companies has performed very similarly to that index. In a scenario where investors decided to dust down the ‘old economy’ vs ‘new economy’ idea, one could imagine NAIT being very well positioned to benefit.

S&P 500 AND NAIT

Source: Morningstar
Past performance is not a reliable indicator of future results

At our recent online event, Real Dividend Heroes and Growth Giants, a range of fund managers gave their own views on this topic, and all the presentations are available to watch back, and the accompanying presentations are available to download. One particularly interesting slide can be found in the presentation given by the manager of the global growth trust Brunner (BUT), which has been reducing exposure to the most highly valued companies in the US in favour of first or second derivative beneficiaries. If one downloads and views slide 17 of the presentation one will see a couple of eye-watering statistics that bring the issue of valuations to life. First, South Korean auto manufacture Kia has similar net income to Tesla, but the latter company has an enterprise value 87x (not a typo) that of the former. Second, US AI defence stock Palantir’s market cap is c. $430bn on revenues of $3bn. Whereas, the next five largest defence stocks in the US have a combined market cap of $550m on revenues of $262bn. Once again, our 2025 version of imagination probably feels quite casual about that and can easily fill in the growth case for the difference. But can we really be so confident that we aren’t missing out on the other side of these trades?

One of the toughest places to be a fund manager in the last couple of years has been US small caps. Both the specialist investment trusts in this space, Brown Advisory US Smaller Companies (BASC) and JPMorgan US Smaller Companies (JUSC) identify as ‘quality growth’ investors and this has been a very difficult place to be. Earlier we noted that there isn’t the same mania for IPOs of companies with only very sketchy business models, but in US small-cap land there certainly has been a more recent mirror of the S&P 500 Index’s experience, where a handful of stocks attached to the AI theme have dominated small-cap indices. Many of these businesses are unprofitable and therefore don’t meet the ‘quality growth’ threshold. This has been a major contributor to both of these trusts’ underperformance, but again, can we really be so confident that there aren’t opportunities on the other side of this trade?

Conclusion

Stock markets are more complicated than we’ve portrayed above, of course and the US and other markets are influenced by other big factors of the day. While the so-called ‘hyper scalers’, or mega caps, or whatever we choose to call them, are proceeding at pace with their capital expenditure plans to build the infrastructure required to power AI, much of the rest of corporate America has delayed its own spending and investment while it ponders the implications of trade tariffs. The UK has just been through its own arguably unnecessary period of uncertainty around the budget, with similar results for corporate spending. No doubt this very distinctive contrast is skewing earnings reports, and as we note above, has led to a very polarised smaller-companies market in the US. But uncertainty is waning as the US administration moves on to other matters. With greater certainty we may see a more balanced cycle of expenditure across other businesses.

It’s very difficult for many of us to imagine, and perhaps confront, the transformative effect AI will have on our lives and on businesses. It’s far less difficult for us to imagine that a few large companies will end up fully justifying the valuations we’ve placed upon them, and that belief has profoundly influenced the composition of US and global stock markets. But it seems far harder for us to imagine that, for that to happen, all the other companies need to have a reason to buy their products. In our imagination, that’s where the opportunity increasingly lies.