ISA funds around the world: eight pairings to mix and match

Faith Glasgow explains the benefits of investing in funds with contrasting styles or approaches, and asks a range of experts to name their top fund pairings for several major regions.

18th February 2026

by Faith Glasgow from interactive investor

Should you hold several funds covering the same market? Certainly, articles about diversification often warn of the dangers of stock overlap between funds, resulting in unwitting over-exposure to particular companies.

However, all markets comprise a range of businesses in terms of size, sector, and other characteristics such as growth, value, or a dividend focus – so there’s a interesting case for combining funds that adopt complementary styles or focuses to cover the same region.

Obvious pairings include growth-focused holdings with those seeking out undervalued businesses, and pairs concentrating on different market capitalisations.

Not only can such combinations provide broader (but still selective) coverage of that market, but they may respond differently to wider macroeconomic issues such as interest rate trends, inflation or US tariff imposition – giving you a more robust portfolio overall. 

To give you some ideas for attractive pairings, we’ve asked some experts for their recommendations across several major regions.

Global

Global fund managers have a huge universe of stocks from which to select, making a best-ideas philosophy – where the manager does a lot of filtering and deep research – an attractive starting point. On that basis, Sheridan Admans, founder of Infundly, a UK-based investment consultancy, suggests pairing the WS Blue Whale Growth I Sterling Acc and WS Havelock Global Select A GBX Acc funds.

Although both funds take a similarly high-conviction approach, they come at it from very different starting points in regard to portfolio construction, risk exposure and sources of return.

Blue Whale Growth uses bottom-up selection processes to identify just 25 to 35 large-cap stocks from developed markets, particularly North America. It focuses on businesses with real potential to grow and become more profitable in the long term, and attractive valuations bearing that potential in mind.

“This structure gives Blue Whale strong upside participation when global growth leadership is concentrated in high-quality franchises with durable earnings and pricing power,” Admans explains – although the portfolio can be relatively volatile.

In contrast, Havelock Global Select’s 30 to 40 holdings are selected on the basis of value and quality, “where valuation, balance-sheet strength, asset backing or behavioural mispricing create attractive long-term return potential”.

There’s a bias towards mid- and smaller-cap businesses and away from the crowded mega-cap growth space, and a more even spread across the US, UK and Europe, reducing reliance on any single regional growth engine and helping to lower volatility.

The two strategies form a complementary global equity pairing, says Admans. “One is designed to capture sustained growth in dominant franchises through a concentrated large-cap portfolio; the other seeks out a concentrated set of value and quality-led ideas, exploiting mispricing and structural inefficiencies.”

Stephen Yiu, manager of Blue Whale Growth, was recently interviewed by interactive investor. You can watch the videos via the links below.

The US

At Nedgroup, multi-manager portfolio manager Madhusree Agarwal offers a markedly different approach to US investment.

Nedgroup makes strategic use of index tracking funds to deliver returns for investors, and for US coverage that includes pairing the S&P 500at market‑cap exposure with a S&P 500 Equal Weight ETF. As Agarwal observes: “On paper, they hold the same companies. In practice, they deliver very different outcomes.”

There are plenty of index fund and ETF options to gain exposure to the S&P 500 index, however the most-popular options among interactive investor customers are the accumulating and distribution versions of 

Vanguard S&P 500 ETF USD Acc  VUAA

 and 

Vanguard S&P 500 UCITS ETF GBP  VUSA

Two equal weight ETF options are Invesco S&P 500 Equal Weight ETF Acc GBP  SPEX

 and 

Xtrackers S&P 500 EW ETF 1C GBP  XDWE

Agarwal explains that the market‑cap weighted S&P 500 “remains the most efficient way to capture long‑term US equity growth, but it naturally becomes concentrated in the biggest winners, particularly during periods when mega‑cap growth stocks dominate markets”.

As a result, investors can end up with far more concentrated exposure to a small number of names than is desirable. By pairing a standard S&P 500 ETF with an equal-weight approach counterpart, she adds, risk is spread more evenly and rebalancing takes place regularly.

In addition, Agarwal suggests complementing this large‑cap pairing with S&P 600 small‑capexposure. That further broadens the source of returns for investors, providing greater sensitivity to domestic US growth and higher use of debt to leverage returns. Options include 

iShares S&P SmallCap 600 ETF USD Dist GBP  ISP6

 Invesco S&P SmallCap 600 ETF  USML

“Importantly, the S&P 600 includes profitability screens, which improves quality relative to many broader small‑cap indices,” she notes. Rather than betting on a single style being ‘right’, “the aim is to build US equity exposure that can adapt as market leadership changes, delivering a smoother and more resilient outcome”.

The Shard, London, towers over a Union flag.

The UK

For the UK, Admans identifies two valuation-led conviction-based funds that focus on different parts of the market cap spectrum – and also different stages of the recovery cycle.

The large-cap bias of Invesco UK Opports (UK) (No Trail) (Acc) means that “its opportunity set is global in revenue terms, with many holdings generating cash flows well beyond the domestic economy,” he explains.

The managers look for companies trading at discounts to their own history and to peers, often where uncertainty, regulation or cyclical pressure has weighed on investor sentiment.

“This leads naturally to exposure to established, cash-generative franchises, particularly in areas such as financials, healthcare and consumer staples, where balance sheets and dividends provide support while valuation normalises,” he adds.

Aberforth Smaller Companies Ord 

ASL

0.00%

 investment trust, in contrast, is firmly focused on small businesses with balance sheet strength and sustainable dividends, but “where mispricing has been both more persistent and more pronounced” than the Invesco fund.

• Fund Focus: why all the massive moves?
• The fund firm topping the performance charts

ASC’s portfolio comprises around 80 companies, but is very much conviction-led, with “stakes of over 10% in 28 companies” and a strong focus on active engagement with management as part of the turnaround process.

As Admans points out, the pairing works because “Invesco provides exposure to UK-listed franchises that can re-rate as pessimism fades, offering income and stability while investors wait; Aberforth complements this with exposure to deeply undervalued smaller companies, where any improvement in liquidity, confidence or M&A activity can drive outsized returns.”

UK smaller companies

Meanwhile, for smaller company aficionados, Ryan Lightfoot-Aminoff, an analyst at Kepler Partners, suggests the pairing of Rockwood Strategic Ord 

RKW

0.33%

 investment trust and IFSL Marlborough UK Micro Cap Gr P Acc fund for their contrasting style and approaches to portfolio construction.

RKW, says Lightfoot-Aminoff, has done very well through “building a highly concentrated portfolio of out-of-favour micro caps, taking sizeable stakes and helping to instigate a turnaround, with the goal of selling after around three to five years”.

The Marlborough fund, in contrast, comprises a highly diversified portfolio of around 150 of the smallest companies in the market, filtering out some parts of the economy before analyzing and picking stocks, “with a preference for growth stocks”.

The contrast in terms of concentration, active engagement and growth versus value tilts makes them a useful pairing for this rich hunting ground.

• How to perform a deep dive on funds, investment trusts and ETFs
• How we invest and lessons learnt

Europe

Peter Walls, manager of Unicorn Mastertrust B, a fund of investment trusts, highlights the fact that although smaller companies can outperform larger counterparts in most markets, “there are periods when they lag behind and then catch up in short order”.

Because it’s so hard to know when those reversals will occur, it particularly pays investors to be diversified across both large and small companies. In Europe, he suggests Fidelity European Trust Ord 

FEV

0.69%

 and The European Smaller Companies Trust PLC 

ESCT

0.23% to cover the market-cap spectrum.

Both have well-regarded managers, but “Fidelity European has nearly all its assets invested in companies valued at more than £10 billion, while ESCT holds companies with an average market capitalisation of £1 billion and rarely strays above £3 billion”.

Another European pair

Taking a more growth/value-based tack, Ben Yearsley, an investment consultant at Fairview Investing, selects the Montanaro European Smaller Ord 

MTE

0.91%

 fund for a fairly concentrated portfolio of small to mid-cap quality growth companies with strong balance sheets, “often in niche areas that are growing”.

He pairs that with WS Lightman European R Acc, a “proper value fund looking for cheap companies that have started to turn the corner”. Again, though, a robust balance sheet is a must.

Silhouettes of people walking in Chaoyang district, Beijing, China.

China

For effective risk-managed exposure to China’s growth story, Admans selects Jupiter China Equity Fund U1 GBP Acc, a core large-cap fund with a preference for well-established businesses.

“It aims to capture long-term earnings growth through policy-supported structural themes, such as domestic consumption, expansion of the region’s financial market, and digitalisation, while maintaining risk discipline in a volatile and politically sensitive market,” he says.

His suggested pairing is Fidelity China Special Situations Ord  FCSS

which fishes in the same ocean but takes a much more idiosyncratic approach. Because FCSS is “structured as an investment trust, it has the flexibility to use gearing, take short positions, and invest selectively in less liquid or under-researched parts of the market”.

The fact it is an investment trust also gives potential for a further performance ‘kick’ when sentiment improves towards China and the discount narrows. “The pairing works because it separates core exposure from opportunistic return drivers,” Admans adds.

Japan

For effective coverage of the Japanese market, Ben Mackie, a senior fund manager at Hawksmoor Fund Managers, also combines investment trusts and funds with contrasting investment styles and market cap exposures.

His first pick is Nippon Active Value Ord  NAVF

 investment trust, which has a high-conviction portfolio with a small-cap focus. “The managers take significant stakes in smaller companies trading on cheap valuations and follow a strategy of active engagement that can range from constructive advice on operational matters to corporate activity,” Mackie observes.

“NAVF is one of the purest ways of playing the Japanese corporate governance reform story, while the managers’ willingness to effect change and unlock value at individual companies drives idiosyncratic returns.”

Lazard Japanese Strategic Equity EA Acc GBP is selected as a good complement. Mackie explains that while its fund managers can go down the market-cap spectrum (and recently have) the portfolio tends to have a bias to larger companies.

He adds: “Although valuation conscious and often contrarian, the portfolio is managed in a pragmatic manner resulting in balanced, style agnostic exposure to the Japanese market. Stock selection should be the main driver of returns with the high-conviction portfolio a bottom-up collection of convex positions, with a risk management overlay to ensure sensible factor and sector diversification.”

Important information: Please remember, investment values can go up or down and you could get back less than you invest. If you’re in any doubt about the suitability of a Stocks & Shares ISA, you should seek independent financial advice. The tax treatment of this product depends on your individual circumstances and may change in future. If you are uncertain about the tax treatment of the product you should contact HMRC or seek independent tax advice.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company’s or index name highlighted in the article.

Real Estate Credit – Dividend Declaration

18th February 2026

Real Estate Credit Investments Limited (the “Company”)

Ordinary Dividend for RECI LN (Ordinary shares)

Real Estate Credit Investments Limited announces today that it has declared a third dividend of 3.0 pence per Ordinary Share for the year ending 31 March 2026. The dividend is to be paid on 08 April 2026 to Ordinary Shareholders on the register at the close of business on 13 March 2026. The ex-dividend date is 12 March 2026.

As Lower Power Prices Weigh on NAV

Fiona Craig Market News

LSE:NESF

18 February 2026

NextEnergy Solar Fund Limited (LSE:NESF) reported a drop in its unaudited third-quarter net asset value, with NAV per ordinary share declining to 84.9p. The decrease was mainly attributed to softer third-party power price assumptions and weaker winter irradiation, which left UK generation 12.9% below budget.

Taking into account the forthcoming impact of the UK government’s decision to shift Renewable Obligation Certificates (ROC) and Feed-in Tariff (FiT) inflation indexation from RPI to CPI, year-end NAV would have stood at 82.9p. Despite these pressures, the board reaffirmed its full-year dividend target of 8.43p per share, with forecast dividend cover of between 1.1x and 1.3x, highlighting its continued focus on delivering income amid challenging market conditions.

The fund’s capital recycling strategy and recent asset disposals have generated £72.5 million to date, contributing a positive uplift to NAV and supporting efforts to manage leverage. Gearing currently sits just under the 50% debt-to-GAV threshold, although a depressed share price has pushed the enterprise value (EV) gearing ratio above 50%.

Management intends to further reduce leverage through additional asset sales and repayment of its revolving credit facility (RCF). A broader strategic review, scheduled to be presented to investors in March, is aimed at strengthening long-term value. This will be underpinned by the fund’s Article 9 sustainability classification and its ongoing commitment to biodiversity initiatives and strong ESG standards across its supply chain.

The outlook remains constrained by sharply weaker operating performance, including falling revenues and two consecutive years of net losses, alongside negative technical indicators, with the share price trading below key moving averages and a bearish MACD signal. These headwinds are partly offset by improving operating cash flow, a debt-free balance sheet expected in 2025, and a high dividend yield, though these positives do not fully counterbalance earnings pressure and weak momentum trends.

More about NextEnergy Solar Fund Limited

NextEnergy Solar Fund Limited is a publicly listed specialist investor in utility-scale solar and energy storage assets, primarily located in the UK. The portfolio comprises more than 100 operating solar projects with significant installed capacity and long remaining asset lives, generating inflation-linked income from government-backed subsidies and electricity sales into the UK power market.

Dividend:

·     Total dividends declared of 2.11p per Ordinary Share for the quarter (31 December 2024: 2.11p).

·   The Board reconfirms the Company’s full-year dividend target guidance for the year ending 31 March 2026 remains unchanged at 8.43p per Ordinary Share (31 December 2024: 8.43p).

·   Dividend cover for the full-year is forecast to be covered in a range of 1.1x – 1.3x by earnings post-debt amortisation. 

·    Since inception the Company has declared total Ordinary Share dividends of £431m, the equivalent to 82.6p per Ordinary Share.

ByCalum Watson

BBC Scotland

• Published17 February 2026

Updated 24 minutes ago

Richard Fisher likes beer. He brews his own ale at home and once considered buying a brewery. But he never expected he might lose £12,000 investing in Brewdog.

For the former small business adviser from Suffolk, taking a small stake in the upstart beer company from north east Scotland seemed an opportunity too good to miss.

“Maverick, independent, to a certain extent rebellious – it was all good stuff,” he said.

Richard, 58, is one of more than 200,000 investors who put money into the firm’s “Equity for Punks”, external scheme.

Typically they spent about £500 on shares costing £20-30 each but Richard, seeing the firm’s rapid expansion, invested £12,000 in the hope of a good return.

“I genuinely thought Brewdog would go public, be listed on the stock market with the freedom to buy and sell shares and there was potential to make a bit of profit.”

Now, with the news that Brewdog is preparing itself to be sold, he’s resigned to the risk of losing it all.

Even so, there is no guarantee that you will not lose any of your capital. You would have to be extremely unlucky to lose all of your investment but it’s one reason to have a diversified Snowball.

Value Rotation Is Here: How To Position Your Portfolio For Maximum Yield

Feb. 17, 2026

Rida Morwa

Investing Group Leader

Summary

• Hold Safety: We will continue to own “safe” assets like Agency MBS, municipal bonds, and preferred equities.
• We are buying the “fear” in the public market for credit-risk assets. Institutions are willing to pay near par; we can buy them at a discount.
• We are avoiding consumer-dependent dividends (like WEN) in favor of landlords who rent to them (like O).
• Valuation Matters: In a high-valuation market, we will realize gains in expensive stocks to fund purchases in bargain sectors.
• Looking for a helping hand in the market?
• Members of High Dividend Opportunities get exclusive ideas and guidance to navigate any climate. 

Co-authored with Beyond Saving

Typically, we spend most of our time talking about individual picks in our public articles. Today, we are going to pull back the curtain and provide an article that is usually reserved for our members at High Dividend Opportunities, where we discuss our view of the macro environment and the trends in the market that are driving our decision-making about which sectors to look into for new opportunities and which positions we want to exit.

So, instead of focusing on exactly which picks to buy, let’s talk about where the market is headed and where we want to look for dividends in 2026.

The Rotation to Value

It is still early, but so far, 2026 has been a year of rotation.

The iShares Russell 1000 Value ETF (IWD) is up 6.3%, while the iShares Russell 1000 Growth ETF (IWF) is down 5.5%:

It’s a remarkable shift from last year, where Growth was surging while Value stocks lumbered along.

One month doesn’t make a trend, but there is a sense that the market is cooling on Growth and warming up to Value—but there are also some other notable movements in the market. Today, we want to take a look at the underlying drivers of the market and what that means for dividend investors.

An Emphasis on Safety

As we look at the strongest and weakest price action in our portfolio year-to-date, there appears to be a clear preference in the market for safety. Agency mREITs are up a lot to start out the year, even though they are trading at high premiums to book value.

Additionally, we’ve seen the discounts to NAV shrink for holdings like BNY Mellon Municipal Bond Infrastructure Fund, Inc. (DMB), which was trading at a 10% discount to NAV at the end of December and is now trading at just a 5% discount.

We see reliable dividend growers like Realty Income (O) and Enterprise Products Partners (EPD) seeing some positive momentum after a fairly flat 2025.

Essentially, the holdings in our portfolio that focus on safe credit assets or physical assets like commodities are performing the strongest.

On the other side of the coin, we are seeing credit risk holdings underperforming. In our portfolio, that primarily means BDCs and CLO funds have been flat to down.

While we continue to believe that credit losses are likely to remain relatively low, there is fear in the equity markets that is being reflected in the price action of businesses and funds that are exposed to credit risk.

This fear isn’t being shared among institutions.

Public vs. Private Credit Concerns

Among many assets, there is a huge discrepancy between what the publicly traded stock market is willing to pay for assets and what institutions are willing to pay.

We’ve seen this in several scenarios in our portfolio. For example, SoftBank (SOBKY) is buying DigitalBridge (DBRG) and taking it private for over a 50% premium to its trading price before the rumor. Apollo Commercial (ARI) announced a deal to sell its entire loan portfolio for 99.7% of its carrying value, while the market was pricing in a 20% discount because it feared the credit risk. Even Realty Income has observed that private capital was willing to pay more for real estate assets and is opening up a fund that the public company will manage.

Here is a look at High Yield B Option-Adjusted Spreads. This is the spread that B-rated loans are getting over the benchmark; lower means that institutions are pricing in less default risk:

For some context, this is what this metric looked like going into 2008, before the S&P 500 started declining:

And here is what it looked like before the dot-com bust:

These spreads are primarily influenced by the supply and demand balance between lenders and borrowers. The B spreads are the most sensitive because it is a credit rating that implies higher risk, but it doesn’t imply that there is distress going on right now. If there are a lot of lenders looking to deploy capital relative to companies looking to borrow, spreads will be lower, and they will accept a lower yield. If there are few lenders relative to the number of companies looking to borrow, then the spreads get higher. This is often indicative of either lenders having a lack of liquidity or lenders deciding that lending money to B credits is too high of a risk.

As a result, it can often serve as the canary in the coal mine, with spreads often widening considerably before a recession starts and even before the stock market declines.

These markets are dominated by institutions, whereas in the stock market, there is significant participation among retail investors. In the stock market, we’re seeing many of our credit-risk-exposed holdings trading at steeper discounts or lower premiums than they have in the past.

Soft Fundamentals

As we’ve been documenting over the past several years, the fundamentals of the U.S. economy have been getting weaker. Unemployment has been rising steadily for three years:

Real Retail Sales (adjusted for inflation) have been relatively flat:

Consumers are feeling the squeeze with Real Personal Disposable Income growth slowing down:

Historically, this metric has averaged over 3%.

Consumer confidence continues to decline and, as measured by The Conference Board, is at COVID-era lows: Source

Where the Conference Board reported a sharp drop in January, a similar survey conducted by the UoM (University of Michigan) has a small uptick. However, the UoM survey was already far more bearish, with consumer sentiment near all-time lows: Source

Leading economic indicators continue to decline: Source

While there are undeniably some hotspots in the economy, like the huge investment being made in data centers, it is one hot sector that is surrounded by a lot of weakness.

Stock Picker’s Market

The stock market, on average, is expensive. However, we have seen a diversion that hasn’t occurred since the late 1990s, where the average P/E (price/earnings) ratio of the S&P 500 is materially higher than the median P/E ratio: Source

The median is the company that is in the middle, where 50% of companies in the S&P 500 are trading at higher valuations, and 50% are trading at lower valuations. We discussed the concept of valuation in-depth last month with our members because we believe this is the most important concept in the market today.

Microsoft (MSFT) reported objectively strong results, but the share price declined anyway. We’ve noticed that analysts are asking more questions about the profitability of AI spending rather than just blindly cheering it on. Here is a question that we think exemplifies this concern during the earnings call:

“Keith Weiss Morgan Stanley, Research Division

I’m looking at Microsoft print where earnings is growing 24% year-on-year, which is a spectacular result. Great execution on your part, top line growing well, margins expanding. But I’m looking at after-hours trading and the stock is still down. And I think one of the core issues that is weighing on investors is CapEx is growing faster than we expected and maybe Azure is growing a little bit slower than we expected. And I think that fundamentally comes down to a concern on the ROI on this CapEx spend over time. So I was hoping you guys could help us fill in some of the blanks a little bit in terms of how should we think about capacity expansion and what that can yield in terms of Azure growth going forward. More to the point, how should we think about the ROI on this investment as it comes to fruition?”

In essence, Wall Street is starting to say, “Show me the money!” There isn’t much doubt about the potential for AI and that there will be tons of money to be made, but there are concerns about whether the money will show up in time to justify the trading prices for these stocks. Wall Street is no longer enraptured by the AI arms race; they are starting to ask for tangible results. If they don’t find them, they’ll move on to invest in sectors where tangible results are being realized right now. In a nutshell, that’s exactly what the dot-com bust was all about. It wasn’t that the Internet didn’t have tons of potential; it was about whether that potential was translating into high enough earnings, soon enough, to justify the valuations today. In 2001, the answer was they weren’t.

There are many companies that are trading at low valuations. The strength of the S&P 500 is increasingly relying on a handful of stocks to maintain very high valuations.

What This Means for Income Investors

Let’s put the points we made together:

• The market is favoring investments that are perceived as safer.
• The public markets are valuing credit risk lower than private markets.
• Economic fundamentals are soft, and consumers are struggling.
• Some stocks are trading at premium valuations, while others are trading at low valuations.

Putting these together, what does that point to?

Hold Safety

We want to own assets that are perceived as “safe”. Fortunately, we were buying a lot of those in recent years, like mREITs that invest in agency MBS, municipal bond funds, preferred equities, and bonds. We’ve been pounding the table until our hands were bruised about the virtues of fixed-income investments. We continue to believe that these are good investments, even if the prices are higher than they were. These investments are just starting to come back into favor and have some significant upside left to go.

For investors who don’t have a healthy allocation to these investments, there is still time to add them.

Credit Risk Arbitrage Opportunities

For the credit risk portion of our portfolio, there is more opportunity, but also more risk. These investments are trading at lower valuations in the public markets than they can get in the private markets. As a result, the chances of seeing drastic moves like ARI’s decision to sell substantially all of its assets are higher. We could see more of these publicly traded vehicles being taken private or large asset sales from publicly traded companies to private companies to take advantage of the valuation differences. The public companies will be exploring ways to unlock that value, which could create significant upside for public shareholders.

On the risk side, with investor enthusiasm low, prices are likely to remain under pressure. This will be accelerated to the extent that management teams reduce dividends in response to lower interest rates on floating-rate investments or as a strategy to retain capital to make new investments. We expect dividends for BDCs to generally drift downward toward 2021 levels, and CLO equity funds have become a wildcard with a big unknown on whether other funds will follow OXLC’s example and position themselves to have a profile of growing NAV and paying lower dividends or if they will continue to pay out substantially all their cash flow at the expense of NAV.

We believe that long-term credit risk is trading at attractive valuations in the public markets. We believe that the institutions are right, and the risk of defaults is relatively low. But sentiment is negative, and it could become more negative as the year goes on.

Be Aware of the Consumer

When making an investment, we should be aware of whether our dividends are dependent upon a strong consumer. Dividends that stem from areas of relatively inelastic demand should be favored over dividends from sectors that are very elastic.

The Wendy’s Company (WEN) is trading at a 7% yield, but it’s a company that is quite dependent upon consumers being willing to pay for convenience. We expect another dividend cut to be very likely, so we will avoid it.

No doubt, we will see many consumer-centric businesses with yields that tip into our territory. We will exercise caution when choosing whether or not to take advantage of those “deals” because we recognize that the consumer is weak. We would rather own the landlord who rents properties to WEN because WEN is good for the rent even after they cut the dividend. O’s 5% yield > WEN’s 7%.

Be Aware of Valuations

When the market has been generally bullish for an extended period, there is often a tendency for investors to start dismissing the concept of valuation as irrelevant. It is true that buying something cheap doesn’t mean that you’ll make a lot of money right away. It doesn’t mean that the price won’t go lower for an extended period of time. However, in the long run, only two prices matter when calculating your total return: the price you pay and the price you sell at.

Prices bounce all over the place. Valuations go high, they dip low, and they will go to both extremes much further than any amount of staring at numbers can justify. We remember in 2021 when some preferred shares were trading at such high premiums to par that they had a negative yield-to-call, and people were buying preferred equity where the inevitable return was a guaranteed loss. There have been cases of bonds trading at negative yields to maturity.

If that kind of inaccurate pricing can occur in fixed income, where the amount of the interest/dividends is known to the penny, and you can calculate with a pencil and paper the best possible return that you can have by the call date or maturity date, and investors are still buying tickers that are guaranteed to have negative returns—how far off can the market be when the future returns are at best educated guesses that are open to debate? It can be off by a lot, and it can be off for a long time

Eventually, the chickens come home to roost, and the market comes around to recognize the earnings that it previously undervalued, or the earnings fail to materialize, and the price comes down to a level reflecting that. The thing is that there is always a future, so while the market will cross that “fair value” line, it will usually keep going until the extreme is in the opposite direction.

When a stock in your portfolio is up or down a lot, make sure you take the time to understand how much of that price difference is due to an actual change in earnings and how much is due to a change in valuation. You want to buy at a low valuation and consider selling when investments are trading at a high valuation.

Conclusion

It is a stock-pickers’ market where there are some investments that are simply too expensive to be reasonable investments, some investments that are more expensive but still have a good long-term return profile, and some investments that are absolute bargains.

This is true for dividend investors as much as it is for everyone else. In our portfolio, we have a base with the relative safety of assets like agency MBS, fixed income, and bonds. For several years, this portion of our portfolio actually saw the lowest valuations. That is changing, although there are still opportunities that are attractive long-term.

To that base, we add investments in holdings and sectors that carry more risk but are trading at low valuations. Today, credit risk is a good place to look for investments that are trading at low valuations and paying very high yields.

We will focus on sectors that aren’t dependent on a strong economy. Sectors supported by tangible assets and inelastic consumer demand. Real estate, utilities, infrastructure, and more.

My share programme has changed it’s format, so some information will have to be be reported in the new format.

Some of the reported target prices may be difficult to achieve unless market conditions for Renewables improves.

TRIG NAV falls on weaker power price outlook and higher offshore wind discount rates; shares slip

Fiona Craig

LSE:TRIG

Market News

16 February 2026

The Renewables Infrastructure Group (LSE:TRIG) posted a larger-than-anticipated quarterly decline in net asset value, as softer power price assumptions and higher discount rates for UK offshore wind assets weighed on valuations, pushing the stock 2% lower on Monday.

The renewable energy investment trust reported that NAV decreased 5.2% to 104 pence per share in the fourth quarter, down 5.7 pence from 109.7 pence at the end of September. The move translated into a negative total NAV return of 3.7% for full-year 2025.

Management attributed the decline primarily to a 1.8 pence per share reduction linked to lower consultant power price forecast curves, alongside a 1.2 pence impact from a 50 basis point rise in discount rates applied to UK offshore wind projects. A further 1.8 pence per share drag stemmed from generation coming in below budget and operational challenges.

An additional 0.6 pence per share reduction reflected changes to indexation of UK Renewables Obligation Certificates (ROCs), which will now be tied to the Consumer Price Index rather than the previous benchmark.

Electricity generation was 5% below budget during the fourth quarter, largely due to economic and grid curtailment in Sweden. However, this marked an improvement compared with the first half of 2025, when output fell 10% short of plan. Sweden accounts for roughly 14% of TRIG’s portfolio by NAV and has persistently underperformed expectations, analysts said.

“While generation missed budget by 5% in Q4, this is an improvement versus the performance earlier in the year,” said Joseph Pepper, analyst at RBC Capital Markets, which maintains an “outperform” rating on the stock with a 90 pence price target.

“We think management’s target future cover of 1.1-1.2x looks credible given inflation-linked cash flows and an improving debt amortisation profile, although we note that Sweden remains a consistently underperforming geography in the portfolio.”

TRIG reiterated its dividend target for fiscal 2026 at 7.55 pence per share, unchanged year-on-year. Net dividend cover for fiscal 2025 was reported at 1.0 times. On a gross basis, excluding annual amortising debt repayments, dividend cover stood at 2.1 times. Management continues to guide toward net dividend cover of 1.1 to 1.2 times over the medium term.

The company had previously cautioned that dividend cover would be “tight” for fiscal 2025.

Shares closed Friday at 69.20 pence, implying a discount of about 34% to the newly reported NAV, broadly aligned with the peer group average discount of around 35%.

“Given the quantum of the quarterly movement this morning we would expect shares to trade lower today,” Pepper said.

TRIG’s portfolio includes approximately 90 renewable energy assets across six countries, with about half of its exposure in the UK, leaving it sensitive to domestic regulatory developments and wholesale power price trends. The trust primarily invests in operational wind and solar projects, with UK offshore wind forming a substantial component of its holdings.

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