Global Listed Infrastructure declined in the September quarter as a combination of rising interest rates, political interference and equity issuance dampened returns.

Market Review

Global Listed Infrastructure declined in the September quarter as a combination of rising interest rates, political interference and equity issuance dampened returns.

The Fund fell -1.2% over this period, compared to a return of +1.8% by its benchmark index1. Global equities2 ended the quarter +6.3% higher.

Annual Performance (% in GBP) to 30 September 2018

Cumulative Performance (% in GBP) to 30 September 2018

These figures refer to the past. Past performance is not a reliable indicator of future results. For investors based in countries with currencies other than the share class currency, the return may increase or decrease as a result of currency fluctuations. Performance figures have been calculated since the launch date.

Performance data is calculated on a net basis by deducting fees incurred at fund level (e.g. the management and administration fee) and other costs charged to the fund (e.g. transaction and custody costs), save that it does not take account of initial charges or switching fees (if any). Income reinvested is included on a net of tax basis. Source: Lipper IM / First State Investments (UK) Limited. *The benchmark changed from the UBS Global Infrastructure & Utilities 50-50 Index on 01/04/2015. 

¹ FTSE Global Core Infrastructure 50/50

² Based on MSCI World Net Total Return Index, GBP

Fund Activity

The Fund initiated a position in Williams, an energy infrastructure company with core assets in strategic locations. The sale of non-core assets has enabled the company to repair its balance sheet, reduce commodity exposure and lower operational risk. The company made positive changes to its Board and management team, and moved to simplify its corporate structure. Williams can now focus on connecting rising natural gas production in Texas and the Northeast US with growing demand from eastern US population centres and LNG export facilities.

SBA Communications owns a high quality portfolio of wireless towers with long-term visibility from contracted revenues. Structural growth is driven by demand for wireless data, price escalators and share buybacks. The company offers a focused strategy from a management team with strong execution and clear alignment. Recent underperformance means our concerns on their exposure to Latin America are now discounted in valuations, providing an attractive entry point.

Emera is a Canadian-listed electric and gas utility deriving most of its earnings from business-friendly jurisdictions in the United States. A period of significant underperformance, reflecting concerns for its stretched balance sheet from the US$10 billion acquisition of a Florida-based utility, presented an appealing entry point. The company's refocus on organic rate base growth, along with the expected sale of non-core assets, should enable Emera to re-rate to valuation multiples that better reflect the quality of its underlying regulated business.


The Fund invests in a range of global listed infrastructure assets including tollroads, airports, ports, railroads, utilities, pipelines, and wireless towers. These sectors share common characteristics, like barriers to entry and pricing power, which can provide investors with inflation-protected income and strong capital growth over the medium-term. 

Tollroads represent the Fund's largest sector overweight. Tollroad operators provide an essential service in congested corridors. Traffic volumes tend to be resilient and inelastic to price increases. Transurban has a dominant market position within Australia's largest cities and significant optionality to further enhance its networks. Peers in Europe, China and Latin America face greater political and economic challenges, but these risks are fully discounted in current valuations.

Energy pipelines offer exposure to regulated or contracted assets. Sentiment towards the sector is improving as companies have taken steps to sell non-core assets, reduce leverage and simplify corporate structures. The sector is well positioned to benefit from structural growth in North American energy exports.

The Fund remains underweight airports and some US utilities. Despite strong growth prospects and high quality assets, many companies in these sectors are trading at valuations that we find difficult to justify based on company fundamentals.

Overall, recent performance has been impacted by rising interest rates and political interference. With these key risks now discounted into valuations, we are cautiously optimistic that market sentiment will become more positive although this is not guaranteed.

Important Information

This document has been prepared for informational purposes only and is only intended to provide a summary of the subject matter covered and does not purport to be comprehensive. The views expressed are the views of the writer at the time of issue and may change over time. It does not constitute investment advice and/or a recommendation and should not be used as the basis of any investment decision. This document is not an offer document and does not constitute an offer or invitation or investment recommendation to distribute or purchase securities, shares, units or other interests or to enter into an investment agreement. No person should rely on the content and/or act on the basis of any material contained in this document.

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