Global listed infrastructure has shown itself to be a good defensive option historically. It is a great diversifier from both a growth and income perspective in uncertain times, and there is no better way to manage risk than to diversify.
Traditional players
Those wishing to access the asset class may want to consider the First Sentier Global Listed Infrastructure fund, managed by Peter Meany and Andrew Greenup.
The managers build a 40-strong portfolio that specifically targets economically sensitive assets with barriers to entry and pricing power. Largest exposures at present include electric utilities (33 per cent) and highways and rail tracks (17 per cent).
Another is the M&G Global Listed Infrastructure fund, managed by Alex Araujo.
He invests in three distinct infrastructure categories:
- economic infrastructure (65 per cent to 75 per cent of the portfolio), such as utilities and energy companies plus transport-linked areas including toll roads and airports;
- social infrastructure (10 per cent to 20 per cent) in areas like health, education and civil; and
- evolving infrastructure (15 per cent to 25 per cent) such as communications (mobile towers and data centres) and transactions, like payment companies and royalties.
Araujo targets companies with critical physical infrastructure, long-term concessions, or perpetual royalties. They need to be paying some level of dividend and have a market cap over $1bn. Araujo will want to know about the dividend situation – its history and outlook – the capital discipline of the firm, and sustainability credentials.
The digital alternative
Schroder Digital Infrastructure fund seeks to take advantage of the ever-increasing demand for digital infrastructure and the sustainable transition to a digital economy. It holds around 40 stocks invested around the world in a mixture of emerging and developed markets.
The fund has three main areas it will invest in: macro towers, fibre optic cables and data centres.
Darius McDermott is managing director of FundCalibre
