August 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).

• June factsheet: Following May’s 3.3% recovery, June saw an NAV total return of 0.4% (cumulative performance from August 2024 to date to +11.2%). Volta’s latest six-month cashflow generation was slightly up at €28.m, ca.21% of June’s NAV on an annualised basis. Cash stood at 11% of gross assets.
• Underlying fundamentals: Credit markets shrugged off tariff, geopolitical and spiking oil-price worries to close near to the tightest levels experienced over the past year. US leveraged loans closed ca.40c up, trading at 97% of par value. US High Yield returned 1.9% while Euro loans were up 0.13% and US loans 0.80%.
• Valuation: Volta trades at a double discount: its share price is at a 10% 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 returns have been robust: 9.6% p.a. (dividend reinvested basis) since inception to end-June 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.