Foresight Solar Fund (FSFL) - Share Chat

Foresight Solar Fund aims to invest in ground-based solar and provide inflation linked dividends and enhanced capital value.

Read more about it here.

It’s interesting because it has managed around 6% dividend yield, profits are now covering dividends, and dividends have been increasing every year.

~6% dividend target, 1.18% annual management charge. This would be a decent income investment, can’t see a huge scope for capital growth on it, but I would consider it as part of a portfolio, certainly diversifying :slight_smile:

Based on the Factsheet

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This trust focusses on solar energy investments and aim to provide capital growth over the long term as well as a growing dividend.

I’ve held foresight for over a year now. It’s income generation has been very steady, with good dividends.
The stock price has just been trickling down all year, which improves the yield, but is slightly concerning.
Anyone have any insights as to why it’s in decline?

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I own FSFL too, but probably not for much longer. I suspect the root cause is increasing exposure to wholesale power pricing. These prices are in decline - maybe this is one of the by products of renewables: plentiful cheap electricity. Take a look at the principle risks in the annual report - top of the list is the impact of decline in wholesale power pricing.

Existing assets are losing value which is natural (except when their lifespan is mysteriously lengthened), new assets are subsidy free - likely to increase exposure to wholesale prices.

This is likely to reduce NAV, and the share price will follow. Ultimately if cash reduces significantly the dividend will be put at risk. Which may be why we have changes to the investment objective - the dividend used to be linked to inflation, not any more. Take a look at historical versions of the investment objective. A slight but sneaky change.

Not as sneaky as changing the discount rate used to calculate the NAV. The calculation of NAV and the choice of discount rate isn’t properly explained in the reporting. A reduction in the discount rate will push up the NAV, or in this case, cushion the fall.

Their decision to get exposure to batteries may help the above issues as the revenue isn’t linked to power pricing in the same way.

I now view this as a bet on them being able to add to, and churn their assets at a faster rate than they devalue, and than power prices decline. As an investment it probably boils down to whether the dividends offset the likely erosion in capital.

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Thanks for your detailed insight into this. I too need to make a decision about whether to sell up and move on with this.

Dividend payment!

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Foresight Solar Fund dropped from FTSE 350 index.

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I had hopes the long dip during lockdowns would turn around but nope :man_facepalming:

This type of fund is all about the dividend payment and the NAV (net asset value). The share price is basically meant to hover slightly the NAV and you pocket the dividends. They are very safe plays but lower power price forecasts have led to some reductions in NAV this past year. Its certainly not ideal but should hopefully recover gradually if power prices increase as I expect them to from next year. Im looking to hold this and a few other similar funds for 10 years or so and keep pocketing the 6% a year dividend yield.

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Good explanation - thank you. I have invested across a few of these types of funds (Bluefield Solar, Greencoat Wind, Next Energy Solar and TRIG) to hedge some of the risks you outline but it boils down to how good the management are at navigation the post subsidy renewable energy market and picking their targets. The Australian investments were not successful. That said Im expecting NAV to pick up from next year as forward power prices (in my view) are set to increase. We have a lot of nuclear coming offline in the next few years, a high carbon price, rising inflation and LNG prices going up.

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Also EV surely means more power needed and higher prices potentially.

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