February 2026 Monthly

In multiple notes, we have recommended that investors “follow the cash” and we continue to do so. In its latest factsheet, Volta reported that the fund generated cash equivalent to about 20% of November’s NAV, on an annualised basis, broadly in line with the level seen for over two years. In 2026, we expect it to moderate slightly but still to exceed more than 2x the 8% of NAV annualised dividend cost. The macroeconomic and interest rate environments are uncertain, but any increase in defaults/credit losses is expected to be very manageable. The manager continues to actively target specific niches for new investments. We expect continued short-term NAV volatility reflecting broader sentiment, not company-specific issues.

• Portfolio diversification: Volta’s total returns have no correlation with benchmark bond indices. Over the long term, it has outperformed UK and European markets; and, by providing investors with more stable dividend income, and less volatile capital gains, it also provides diversification.
• Yield: Volta’s ca.9% yield comes from a clearly stated dividend policy (paying quarterly an equivalent to 8% of NAV). Current cash generation is over 2x the dividend payout, which provides a good cushion for the dividend sustainability. It also means that there should be a growing dividend as the NAV grows.
• Valuation: Volta trades at a double discount: its share price is at a 6% 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, historically, some competitors to Volta had a more stable NAV valuation due to a different asset valuation approach. Fundamental, long-term share returns are robust: 9.4% p.a. (dividend reinvested basis) since inception to end-Nov 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.