Diversification
For Mr Ho, every single country is different, so infrastructure investment very much tends to be a local issue, with “each country having different cultures, laws, ways of doing business, and so on”.
Yet all have some form of infrastructure development. Collins Roth, managing director at MPC Industrial Projects, states: “Almost every market in the world would benefit from greater infrastructure spending.
“Even China, which has put massive amounts of capital to work, still needs more investment.”
As a result, diversification is needed to get access to various growth and income potential.
James Smith, portfolio manager at Premier Asset Management, comments: “Different investments will be suitable for different investors, but we believe a globally diversified approach to infrastructure investing makes a lot of sense.
“This is partly because one of the major risks in infrastructure can be political, but also because the opportunities for finding good income and growth investments in infrastructure assets are global.”
According to Nick Langley, co-chief executive and co-chief investment officer at RARE Infrastructure, a Legg Mason affiliate, investors should hold both domestic UK and global stocks.
“There are significant opportunities available overseas, and therefore investors should not restrict infrastructure holdings to one or even a handful of countries.”
Within the Legg Mason IF RARE Global Infrastructure Income fund, he says there is a global mix of user pay and regulated assets.
“The characteristics of each region, including the strength and stability of regulation within them, dictate the extent to which we hold assets within them, and the split between regulated assets and user pay assets.”
Mr Roth adds: “We believe global exposure, including emerging markets, is an interesting option for large investors seeking portfolio diversity.
“Global exposure can add uncorrelated performance to a portfolio by taking exposure to GDP outside of a home market, but without taking full market, consumer or brand risk. It’s a question of risk tolerance.”
simoney.kyriakou@ft.com
