Thursday 25 November 2021

Personal Assets Trust - Update

This 'Steady Eddie' capital preservation investment trust was added to my portfolio back in 2013...sold a couple of years later but then re-purchased in May last year as I was re-evaluating asset allocation following the Covid-19 shock to global markets.


The trust has this week published results for the half year to end October 2021 (link via Investegate)

Over the past 6 months, net assets have increased by 5.9% (total return) compared to 5.4% for the FTSE All Share index. Over the past 3 years the returns were 28.8% and 17.6% respectively. The trust's share price is maintained close to NAV and the price has increased by £22.00 to £493 since April.

At the end of the period, asset allocation remained defensive with liquidity at 59.3% (cash, gold and bonds etc.).

I was really pleased to note that the trust has now sold its last tobacco holding, Philip Morris which was previously my main concern. I was hoping they would consider dropping this unethical holding and I am sure my email correspondence on the subject last year swung the decision!  They also disposed of Buffett's Berkshire Hathaway, one of the reasons being the management have not yet fully grasped the ESG nettle.

3 Yr Share Price v FTSE All Share
(click to enlarge)

Commenting on the results, investment manager Seb Lyon said:

"For the past two decades, with a few brief exceptions, we have lived in an era of benign inflation.  Central banks, if anything, have been fighting deflationary shocks since the Asian and Long-Term Capital Management crises of the late 1990s and, more recently, the Great Financial Crisis of 2008, followed by the Eurozone debt crisis of 2011.  Investors may be ill-prepared for rising interest rates; fixed income investors offered low nominal and negative real returns are being driven to higher-return equities, which supposedly offer 'real' protection.

The discount rate, the basis of which is determined by the 10-year US Treasury yield, is key.  Equities have been supported by four decades of falling interest rates.  Should this dynamic change, investors may be in for greater volatility as the support from low rates is questioned.  This raises uncertainty over the value of the expected growth in earnings from equities, which becomes less precious when eroded by inflation.  A battle lies ahead between the 'inflation-protecting' qualities of stocks and the threat of nominal interest rate rises in the future. There is a risk that some 'alternative assets' such as highly geared real estate similarly may not offer much defence.

We consider these risks when structuring the Trust's portfolio.  Gold bullion and inflation-protected securities provide a foil for our equity exposure, which in turn is focussed on durable, profitable companies that continue to grow and have pricing power.  Looking ahead, the Trust's liquidity will provide both downside protection and the ability to add to our equities as opportunities present themselves, as we did in the first quarter of 2020".

The trust has paid a small dividend of £5.60 p.a. (paid quarterly) for several years and this is likely to continue for the foreseeable future. This gives a current yield of 1.1%.


Currently equities make up 40% and top portfolio holdings include Microsoft (6.2%), Google (6.0%), Unilever (3.6%), Nestle (3.6%), Visa (3.4%) and Diageo (3.2%).

US index linked bonds make up just over 30% with cash and UK treasuries a further 21%. Gold accounts for just under 8% of the portfolio.

The shares were re-purchased for my portfolio at £432 last May and have advanced to currently £501... just off their all-time high point.

The US markets continue to march onwards & upwards but with rising debt levels resulting from Covid, inflation on the rise and the threats posed by climate change, I think in these uncertain times it's probably a sensible idea to think about the potential downside of the markets and with an eye on capital preservation. I have also added the Trojan Ethical fund to my green portfolio which is managed by the same stable on very similar lines. 

I topped up my holding in both earlier this year and these two combined make up around 12% of my portfolio...up from 6% at the start of this year.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

Friday 19 November 2021

COP26 - What Was Agreed?

Last month I took a look at what we could reasonably expect from the COP26 gathering in Glasgow. To be honest, I was not really expecting a great deal of progress from our world leaders given their track record over the past 25 years. Now the dust has settled, let's have a look at progress...

Well, we've had two weeks of intense climate talks, representatives from 200 countries, thousands of demonstrators, wall to wall media coverage what has all this achieved? Are we on track to limit global warming to 1.5C?

Here are some of the main points:

* Over 100 countries representing 85% of the world's forests signed up to an agreement to protect the world's forests from illegal logging and land degradation by 2030. Importantly, this included Brazil.

* India, the world's third biggest CO2 emitter pledged to get to 50% renewable energy by 2030

* The US, UK and EU have pledged to cut methane emissions by at least 30% by 2030

* 40 countries including the US, EU, China and India are signed up to a UK plan to speed up affordable green technology worldwide by 2030. The 'Glasgow Breakthrough' covers clean power, road transport, steel manufacturing, hydrogen and agriculture which together are responsible for 50% of global emissions.

* Coal accounts for just over one third of global energy and is the single biggest cause of global warming. 40 countries agreed to phase out coal use by 2040 but some large coal users refused to sign up including China, Australia, India and the US so this is a big disappointment. An agreement to 'phase out' coal was watered down to 'phase down' at the last minute.

* There was no agreement on the phase out of oil and gas but merely a call to phase out 'inefficient' fossil fuel subsidies.

* More countries signed up to the 'Beyond Oil & Gas Alliance' BOGA. Initiated by Costa Rica and Denmark, it aims to build an international coalition of governments and other stakeholders to take practical steps to phase out oil and gas production. Other members include France, Sweden, Ireland, Portugal, Wales, Quebec, California and New Zealand. So far the UK has declined.

* By 2023, all UK listed companies will be required to set out their plans showing how they will move to a low carbon future in line with our 2050 net zero target.

* Having already missed the target for $100bn per year by 2020, they agreed to raise $500bn for poorer countries over the coming 5 years to deal with the transition to cleaner forms of energy and also for 50% of this money to be spent on adaptation to the increasing severity of storms and flooding and rising sea levels.

* The US and China - together responsible for 43% of global emissions - announced they would work more closely over the coming decade and increase efforts to close the significant gap to achieve the 1.5C of warming.

Analysis by the IEA suggests that if all of these pledges are implemented, and that's a big IF, warming would fall from the 2.7C pre-COP figure to 1.8C. Obviously a big step in the right direction but still not where we need to be. The general consensus however is that 2.2C to 2.4C is more likely at this stage which still leaves a big gap to be closed.


Unfortunately, despite all of these pledges, we are still nowhere near on track for 1.5C. I prefer to side with the analysis by Climate Action Tracker, which suggests we are currently heading for 2.4C by the end of the century...assuming all of the pledges are implemented which is never a given.

Of course, this has huge implications for investors both large and small. "Global warming above 1.5C presents irreversible, foreseeable and large scale risks to investors and financial markets" Rebecca Mikula-Wright, CEO AIGCC (link

The big problem is that whilst many countries have a long term ambition for net zero, they mostly lack a solid plan of how to get there so the long term pledges lack credibility. However, they did agree to come back next year (and the year after) with more ambitious climate plans (NDCs) to try and close the gap. Also, it is encouraging that the focus is now firmly on this 1.5C limit rather than 'well below' 2.0C.

Of course, 2.4C  is still a little better than the 2.7C projections before the conference so some progress is made and maybe they can get to under 2.0C next year but I still feel there is a lack of urgency and plans for action over the coming few years to 2030 which is the critical period. But it must be incredibly difficult to get consensus from 200 global countries.

The recent IPCC 'Code Red for Humanity' report suggested that 1.5C was still possible "but only if unprecedented action is taken now". Sadly, the global world leaders have so far failed to take sufficient notice of this warning, and so on we go with more or less business much as usual for the time being and of course more intense floods, more widespread wildfires and billions more spent on the after effects and adaptation.

So, did the gathering achieve the main objective of keeping 1.5C within reach? Well, I think just about although many commentators say it is hanging by a thread.

But I get the feeling that climate change has become more of a priority for some of the big world players such as China, US and EU and I feel a little more optimistic that there is a genuine will to address the problem. Whether they actually implement all these decisions will be crucial but I hope we will look back to Glasgow and see it as a big turning point in the battle to move away from fossil fuels and avoid some of the worst effects of the climate crisis which await a world should we fail to keep warming below 2.0C.

So, I am a little more optimistic than before and I continue to be inspired by the younger generation who are protesting and seem determined to find a way through to a more sustainable world order.

So, on we go to Sharm el-Sheikh, Egypt starting 7th November 2022 and COP27.

Over to you...what do you think about the climate issues and the COP26 gathering? Leave a comment below.

Sunday 14 November 2021

Gore St Energy Storage - Portfolio Addition

Earlier this year, the government decided to up its ambition on climate change and pledged to reduce emissions by 78% by 2035 and totally decarbonise our electricity grid by the same date. This will basically mean less oil and gas and much more renewable energy. More wind - both offshore and onshore and more solar...however the drawback is intermittency so we will require far more energy storage capacity to facilitate the transition.

Renewable energy currently provides over 40% of our energy - up from just 5% a decade ago - and this will only increase as we move to electric vehicles and heat our homes and offices with heat pumps.

There are several ways of storing energy...battery, hydro, flow and hydrogen and we will need at least 20GW by 2030 so quite an increase from the current 1.4GW.

Surprisingly there are still only the two energy storage plays in the UK renewable infrastructure sector - Gresham House (GRID) which joined my portfolio two years ago and Gore St Energy Storage which I have just acquired.

The Set-Up

The fund invests in a portfolio of utility scale energy storage facilities located throughout the UK and more recently Ireland. The fund will have a combined stored capacity of 577MW when the latest acquisitions come on stream later this year. This is rapid growth compared to the 29MW capacity at launch back in 2018.

These facilities provide energy storage for the National Grid and help to provide more stability and flexibility for the entire grid system. The majority of revenues are from frequency response services to the grid. This is mainly dynamic containment which is designed to give a rapid response to significant frequency deviations and then balancing mechanism which is the energy platform used by the grid to buy and sell electricity and manage the system in real time.

As we have witnessed this year, wholesale energy prices have been volatile with gas increasing five-fold due to increased global demand. The company recently announced that this volatility resulted in a doubling of normal revenues for September. This volatility is likely to continue for several months so it will be interesting to see the effect for the energy storage market. Half year results should be out next month.

Alex O'Cinneide, CEO of Gore Street Capital, the Company's Investment Manager, commented:

"It is a critical time for the energy infrastructure systems of the GB and Irish grids as they continue to face new challenges to deliver consistent energy supply, and meet our important obligations towards further onboarding intermittent sources of renewable power. We are only at the start of the growth curve in our industry, as energy storage continues to play an increasingly vital role in balancing energy systems.

Gore Street's portfolio of technologically advanced assets uniquely combined with our in-house expertise of engineering and energy markets, means that we are well positioned to capitalise on the highly attractive pricing available for our services, just as we did when we took first mover advantage and moved our GB portfolio into Dynamic Containment contracts during Q3 2020. We will continue to monitor closely the situation in the energy markets going forward over the Winter months and shall optimise revenue stacking strategies to create additional value for our shareholders."

The company recently raised £74m from a share placing (107p) which will be used to expand the operation with an expected 1GW of capacity in the US and Western Europe.

The trust is attractive to those seeking income and pays 7.0p  in annual dividends (paid quarterly) which gives a yield of 6.0% at the current price.


The global transition to clean energy is now becoming a priority for governments in the UK, Ireland and globally. I expect this to become more urgent in the crucial period to 2030 as we try to curb emissions and limit warming to 1.5C. Energy storage is likely to expand rapidly over the coming decade and will play a pivotal role in the green transition.

One of the factors which has put me off this trust until now has been the relatively high charges - over 3% in 2019/20 incl. performance fee (applied where NAV exceeds a 7% hurdle) but this came down to just under 2% this year and I hope it will continue to become a lower percentage as the company grows. The share price currently trades at a premium to NAV of around 15% which seems to be par for the renewables sector.

GSF share price & NAV past 3 years

The trust is not as sensitive to power prices compared to the likes of the wind/solar infrastructure trusts but benefit more from price volatility which is likely to increase as we continue to reduce our dependence on fossil fuels. The shares were purchased at 115p last week and account for just 2% of my green portfolio.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

Thursday 4 November 2021

A SIPP Can be a Great Way to Save the Planet!

With all the attention on climate due to the COP26 gathering in Glasgow, it may be worth a reminder that our global investment universe will have a big part to play in the transition to net zero carbon emissions by 2050. There will not be many rewarding investment opportunities in a world where warming is over 2.0C...and that is just where we are heading at present.

More and more investors are switching on to the risks associated with climate change. Over recent years there has been the higher profile to climate issues from  the Greta effect and direct action from the likes of Extinction Rebellion.

There are almost daily news items of devastating extreme weather events all around the world...the flooding in Germany, wildfires in Turkey, Greece, California and Siberia this summer. Globally, July was officially the hottest month on record....the past five years have been the warmest years ever. The ice polar sheets are melting at a rapid pace.

Greece...August 2021

It's clear the free market capitalism is not working and at some point in the near future governments will respond to the ever increasing public pressure and intervene as they did in relation to Covid. One option could be the introduction of a global carbon tax...basically a tax on carbon pollution (fossil fuels) which would dramatically change the investing landscape. I'm not sure whether capitalism can actually go 'green' as its basic idea is all about growth whereas green is about the limits to growth on a finite planet...however it can certainly accommodate greener and more sustainable ways of doing things.

Investors, small and large, are part owners of the companies held in their portfolio. Do they really want to own a part of a company involved in fossil fuels such as coal mining or oil & gas exploration? More and more are thinking about this and coming to the conclusion that no, they don't.


It's now 3 years since I started to move my investments away from fossil fuels and into more climate-friendly areas. Here's my SIPP drawdown review for the year to June 2019 recording the sale of City of London, Edinburgh and Vanguard Lifestrategy and a switch to Global Clean Energy and renewable energy infrastructure funds.

Most people in work - whether self-employed or employed in the private or public sector will pay into a pension. This is more so today since the roll-out of auto enrolment.

But how do you know that your monthly contributions are not propping up these polluting fossil fuel  industries?

What will the future be like in 20 or 30 years time when savers are ready to retire and take that pension? Probably a very different world than we see today for sure.

Most of these pensions will be invested in a range of diversified funds. However, a recent analysis of one third of global funds with assets of $27 trillion revealed that less than 1% were aligned with the Paris Agreement and limiting temperatures to well below 2.0C. The study carried out by non-profit charity CDP looked at the holdings in 16,500 investment funds and revealed that just 158 funds were compatible with Paris whilst over 8,000 were aligned with a temperature of 2.75C.

Low cost passive investing has become more popular in recent years. However, around one third of the average global index fund is made up of companies that are doing more harm than good and comprise of industries that continue to accelerate the climate crisis. Therefore it's most likely that your pension will be invested in funds which are not aligned with Paris and in companies that continue to add to the climate crisis.

Yet the majority of people say they want their investments to take account of people and planet as well as profits and say that responsible and sustainable investment is important.

UK pensions hold around £3 trillion invested in the global could make a big difference if it was aligned with Paris and invested in responsible companies.


A self-invested personal pension is a way for investors to take control over where their hard-earned savings are invested. If you are vegan you would not want to invest in meat companies. If you are concerned about the environment and climate change, you will want to avoid the fossil fuel companies and the big banks which finance their operations. You would want to see your funds invested more in green technology and sustainable solutions.

Most people do not really know where their pensions are invested...maybe ignorance is bliss! But it is definitely becoming easier to find greener options such as iShares World SRI ETF covered here iShares Clean Energy ETF covered here or BG Positive - a sample of just three funds held in my green portfolio.

For those who are trying to reduce their personal carbon footprint, research from Make My Money Matter suggests that greening your pension is a staggering 21x more powerful than stopping flying, going veggie and changing energy supplier combined or 20x more effective than switching to an electric car!

Obviously it would make things a lot easier for ordinary savers if the whole industry became much greener but the research from CDP suggests this is just not happening.


It's long overdue for the global finance sector to get its act together on climate change. Former Bank of England governor Mark Carney has recently launched a net zero alliance of financial service which includes index providers, credit rating agencies and stock exchanges. The aim is to align all products and services to achieving net zero emissions by 2050 at the latest. The alliance say they have mobilised firms controlling 40% of global assets and worth $130 trillion to align with the 1.5C warming limit. (I suspect it may take a little while before the banks stop pouring billions into fossil fuels).

This should compliment the net zero banking alliance and the net zero insurance alliance both established earlier this year.

At the COP26 gathering this week, the Chancellor outlined plans for new rules for large UK firms to show how they are meeting climate reduction targets. By 2023 they will have to show how their business will move to zero carbon emissions in line with the governments 2050 net zero pledge.

These initiatives are all heading in the right direction but with less than 1% of global companies currently aligned with Paris, there's a long way to go. However, we have to remain optimistic...the world will transition to a low carbon economy and this process will speed up...companies will inevitably start to adjust to the new reality (some more quickly than others), the markets will adjust and the money will start to move away from fossil fuels and into more sustainable pathways. The young people are demanding change...they have the most to lose in the long term but it will take some time.

In the meantime, investors can be a part of this process and make an immediate impact on the climate by taking more control of how and where their savings are invested by going DIY! Of course, we need to also see some big moves from governments and big business, but we can all make a contribution...however small. When we feel we are making a difference, we feel empowered and just better all round.

When all said and done, a pension or SIPP is just a tax efficient way of saving for a more comfortable retirement in 20, 30 or maybe 40 years time. But the climate scientists all agree...unprecedented action is required now if we are to limit global warming to 1.5C. This will require urgent coordinated action from all governments, especially the G20 as well as the global business community and individuals. We all have a part to play.

If you manage your own SIPP and have made a decision to align your investments with climate in mind, feel free to leave a comment below and share your thoughts with others.