Infrastructure fund open to Kiwis

An Australian fund newly open to New Zealand investors should offer a more defensive equity investment with lower cashflow volatility than global equities, its fund managers say.

Thursday, September 15th 2016, 6:00AM

by Susan Edmunds

Steven Kempler

Maple-Brown Abbott is now able to take direct investments in its infrastructure fund from investors in New Zealand.

Steven Kempler, a portfolio manager at the fund manager, said infrastructure investments usually appealed to people who wanted to benefit from the essential service nature and strong strategic position of the assets.

A primary objective for investing in infrastructure was often capital preservation.

“Infrastructure investing is also seen as a means of potentially increasing real income levels and providing an inflation hedge within a portfolio.”

He said growing interest in infrastructure as an asset class has been underpinned by it having historically provided lower volatility and a less than perfect correlation with global equities, as well as a more stable, sustainable yield that has grown at least commensurate with inflation.

Andrew Maple-Brown, portfolio manager and investment analyst, said there had been strong interest from investment advisers at recent roadshows around New Zealand.

“The important thing from our perspective is that it does fit well into an investors’ portfolio.”

Over the past 10 years, the average return during negative quarters for global equities was 4.8%, whereas global infrastructure investments were down only 0.2%. Global REITS were down 5.3%.

“People realised during the GFC that they needed to have a more diversified portfolio,” he said. During the global financial crisis, infrastructure dropped less than comparable asset classes and recovered more quickly.

United States interest rates were likely to rise but remain lower than historical norms, which would make investments in things such as infrastructure more appealing, he said.

Since inception in 2012, the Maple-Brown Abbott Global Listed Infrastructure Fund (unhedged) has outperformed its benchmark by 16.7% on an annualised basis.

Over the same period the fund has exhibited less volatility (10.6%) than broader equity markets such as the S&P 500 (13.0%) and the MSCI World (12.6%).

The strategy now has over AUD$1 billion of assets under management across both hedged and unhedged options.

Tags: funds management Infrastructure