September 2025 Monthly

In our note, Volatility put into context, we reviewed Volta’s volatility during recent “crisis” periods (2025 tariff uncertainty, Russia’s 2022 invasion of Ukraine, early COVID-19 experience). In one of them, Volta’s share price showed more volatility than that of equity markets, in one it was broadly in line, and in one it displayed less volatility. There is insufficient evidence to say whether Volta is more, or less, volatile than equity markets in risk-off periods, which may come as a surprise to some investors. Investors need to consider both sentiment effects (on the VTA share price and the price of its assets) and fundamentals (CLO structures have many downside risk protections, which have ensured losses below corporate credit equivalents).

• July factsheet:  Following 3.7% gains in May/June, NAV total return for July saw a further 2.5% gain (cumulative performance from Aug’24 to date to +13.9%). Volta’s latest six-month cashflow generation was slightly up, at €28m; ca.21% of July’s NAV on an annualised basis. Cash stood at 16.7% of gross assets.
• Underlying fundamentals: Despite low M&A volumes, loan and CLO issuance was active in July. Loan indices recorded strong performance compared to prior months (+0.88% for the US loan market and +0.55% for the European market). This led to inflated secondary loan prices/increased CLO early redemptions.
• Valuation: Volta trades at a double discount: its share price is at a 9% discount to NAV, and we believe its mark-to-market approach includes a sentiment-driven discount to the expected cashflows. Volta’s yield is a key attraction, and, in our view, it is likely to be more than 2x covered, giving investors considerable comfort.
• Risks:  Credit risk is a key sensitivity. We examined the valuation of assets, highlighting the multiple controls to ensure its validity, in our September 2018 initiation note. The NAV is exposed to sentiment towards its own and underlying markets. Volta’s long $ position is only partially hedged.
• Investment summary:  Volta is an investment for sophisticated investors, as both the NAV and the discount to NAV may be volatile over time. We note that some competitors to Volta, historically, had a more stable NAV valuation due to a different asset valuation approach. Fundamental, long-term share returns are robust: 9.7% p.a. (dividend reinvested basis) since inception to end-July 2025. Volta’s performance relative to that of its peers has been strong, and returns for investments made after the financial crisis were double those in prior years.