AMP brings infrastructure fund to NZ
Advisers need to be sure infrastructure products match what clients are looking for from the asset class, according to AMP, which is launching its global infrastructure fund in New Zealand.
Friday, November 2nd 2012, 7:30AM
by Niko Kloeten
The fund, which has about half a billion dollars under management, is creating a PIE unit trust in New Zealand that will offer a tax advantage for local investors compared to investing in the fund via Australia.
AMP Capital head of distribution George Carter said raising $300-$500 million from New Zealand investors over the next five years would be considered a “good outcome” for the fund; many investors already have exposure through AMP’s KiwiSaver scheme.
Listed infrastructure funds are still relatively new, having originated in Australia in 2006, and according to AMP head of global listed infrastructure Tim Humphreys these funds only account for about 2.5% of the $2 trillion listed infrastructure market.
However, he said the word “infrastructure” is problematic for investors and financial advisers because it has a number of different definitions.
Humphreys said AMP’s fund focuses on companies that own “core infrastructure” such as oil and gas pipelines and toll roads that have long-term contracts and stable cashflows that are often backed by price regulation.
These are of particular appeal to investors at the moment, he said, due to low interest rates and the potential for an increase in inflation, which he said these investments offer good protection against because price regulation often includes an inflation component.
“The way we look at it is: what characteristics are investors in the space really looking for? When we define infrastructure we look at the characteristics that are going to deliver that risk/return profile.”
He said electricity generators including the three big SOE power companies don’t fit the criteria for “core infrastructure” because of risks such as input risk, cost risk, power price risk and technology risk that make earnings more volatile.
The fund’s portfolio manager Jonathan Reyes said Australia had been an early adopter of listed infrastructure funds because of the wide variety of publicly-listed infrastructure investments available in that country.
“In the US there are almost no private airports or seaports and there are not many toll roads listed.... for mum and dad investors, infrastructure is not as tangible. Most Aucklanders realise Auckland Airport is publicly traded and if they want they can buy stock in it.”
Niko Kloeten can be contacted at firstname.lastname@example.org
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