20 Mar, 2008
Andrew Moffat, who manages the CIS UK Income with Growth Trust at
Co-operative Investments, says a revolution occurring in the
world's electricity supply could help power investor returns, even
through a recession.
He said that as countries continue to develop global demand for
electricity will inevitably rise but issues with supply could
result in an electricity shortfall by 2015.
However, Moffat believes that companies developing new generation
plants in emerging countries can continue to grow despite an
economic downturn due to this rapid growth in demand for power.
He said companies tackling this future shortfall will be well
positioned to deliver strong performances. 'Power companies are not
dependent on economic growth in the same way as consumer stocks, so
can deliver performance even in the event of a
International Power, who the manager says is paying an attractive
yield, is one of his favourite picks. 'International Power is
benefiting from the worldwide energy problem. It already
keeps the lights on in 20 countries and is developing its business
in emerging economies where supply is struggling to keep pace with
Scottish & Southern Energy is also top of his list and makes up
one of the top ten holdings in the Income with Growth
Trust. 'Scottish & Southern Energy is committed to improving
efficiency at its power generation plants in the UK as well as
growing its wind power business in line with the Government's drive
to boost energy from renewable,' he said.
'The yield on Scottish and Southern Energy is not huge but that is
not how I play the portfolio. I prefer to buy stocks which are
yielding around 2.5-3% that are growing strong underlying
With regards to the banking crisis Moffat said he feels
the UK is experiencing fairly unprecedented times and warns that
the complexity of the banking system means there well be more to
He also issued a note of caution regarding interest rates saying
that while they remained low during 2007 he foresees a rise this
His predictions for the FTSE 100 were similarly negative saying
they could fall as low as 5200.
According to Lipper, the CIS UK Income with Growth Trust returned
44.3% over a three year period to the end of January, compared to a
peer group average of 32%.