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Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.

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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.

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Leader in systematic equities across market cap weighted indices, smart beta and active quantitative strategies

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Global Listed Infrastructure

Global listed infrastructure

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Strategy Overview

Key Facts

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Infrastructure powers the world we live in - and when it comes to on-the-ground- research, our team can be found on site. 

15+

Years

Our team has an average of over 15 years' industry experience, with complementary skills and a diverse range of backgrounds.

500

Company visits

We meet with over 500 companies, competitors, suppliers, customers, regulators, government officials and industry bodies.

2007

Inception

Our strategy has one of the longest track records in the asset class.

Why invest in the First Sentier Global Listed Infrastructure strategy?

  • Listed infrastructure provides essential services to society, making it less sensitive to the economic cycle. 

  • Growth is being driven by long term structural themes such as the build-out of renewable energy; the need to ease urban congestion; and increasing reliance on mobile data. 

  • Focus on environmental stewardship and social license to operate ensures long term, sustainable returns to shareholders.

  • Effecting change through ongoing engagement and dialogue with companies. 

How we invest in global listed infrastructure

Case study

The potential of solar

The last decade has seen carbon-free renewables, with the help of low cost natural gas, start to displace coal and oil from the developed world's electricity supply. The International Energy Agency predicts that between 2019 and 2024, the world will add enough renewable generation capacity to power the entire United States. 

The continued build-out of renewables, and the need to upgrade and expand energy transmission networks, is expected to underpin stable earnings growth across the utilities sector. Consumers and the environment stand benefit from increasing supplies of clean, affordable energy. One of the largest positions in our portfolio is NextEra Energy, a large cap US utility whose assets include regulated utility businesses and clean energy leader NextEra Energy Resources.

Australia has one of the world’s greatest solar opportunities, but are we doing enough?

First Sentier Investors’ Global Listed Infrastructure Portfolio Manager, Rebecca Myatt explores the Australian solar landscape.

Australia is both leading and lagging in the development of solar

While Australia leads the world in rooftop solar, we lag other markets like the US in the development of large scale solar infrastructure, with government policies and incentives less attractive than other markets.

Whether it is solar, wind or water, the opportunity for investors is ever growing. But not all countries are developing at the same pace – making global research and access to global markets vital to investment success.

Australia leads the world in rooftop solar...

… but lags in large scale utility solar

 
Source: Bloomberg as at 2018.
Source: Australian Photovoltaic Institute, Bloomberg as at 30 November 2019.
Case study

Every investment decision impacts our world

Infrastructure companies have service obligations and moral accountability to the communities in which they operate.

We have formally integrated analysis of environmental, social and governance (ESG) factors into our investment process for over a decade. ESG considerations account for 24% of a company’s score in our quality assessment and ranking model.

Climate change is the most material ESG theme affecting our investment strategy

In the utilities space, attempts to reduce carbon emissions have significant implications for the way in which electricity is generated, transmitted and distributed. Large-scale capital investment in renewables is being led by large cap, publicly-listed electric utilities.

The replacement of older coal-fired power stations with wind and solar power is expected to present substantial capex opportunities for many utilities over coming years. Looking ahead, climate change also has material implications for energy pipelines, which could face stranded asset risk; and freight railways, whose haulage mix may evolve as coal volumes decline further.

We influence companies towards ESG best-practice, engaging on material issues to achieve specific outcomes

A key issue we address with companies and industry bodies is the subjective nature of the information provided on environmental matters.

Engaging with Kinder Morgan

The board

Pipeline operator Kinder Morgan's board initially recommended voting Against providing methane emissions reporting and a 2 degree scenario analysis report. We believe that as shareholders, we have the right to clear disclosure around how the company monitors, manages and minimises climate change and sustainability-related risks.

Our approach

We requested that Kinder Morgan improve their environmental disclosure procedures, particularly relating to Greenhouse Gas emissions. The company is now working on a new framework which will enable them to provide more information on these topics. US$22 million will be spent on improving their data collection, assessment and production systems.

Steven Longishname

Image caption here

How do I use listed infrastructure in my portfolio?

Delve deeper into a global equities exposure

Based on our analysis, many global equity managers hold less than 2% of their portfolios in infrastructure assets – and these positions tend to be concentrated in the larger utility names. We have generated much of our alpha from growing mid cap stocks, such as toll roads, oil storage and gas utilities, which are often under-researched by global equity managers.

Infrastructure the world relies on

Over the past 15 years, global listed infrastructure has returned over 3% more than global equities on average with a lower level of volatility.*

These attractive risk-adjusted returns have been delivered by assets with high barriers to entry, strong pricing power, predictable cash flows and sustainable growth.

Growth of a $10,000 investment

Source: First Sentier Investors. Monthly data from 30 June 2007 to 31 July 2020. 

*Wholesale Global Listed Infrastructure Securities, after fees and expenses. FTSE Global Core Infrastructure 50/50 Net TR (AUD Hedged) from 1 April 2015, previously UBS.

Discover opportunities in infrastructure

Infrastructure provides essential services for the way we live. It also offers investment opportunities as companies look to solve issues around digital connectivity, urban congestion and renewable energy.

Head of First Sentier Investors Global Listed Infrastructure, Peter Meany discusses how infrastructure can offer investors steady dividend growth, inflation protection and long-term capital growth.

Adviser Resources

Five myths of infrastructure

This paper discusses five common myths associated with investing in global listed infrastructure.

Past, present, future

Learn more about major trends that have affected GLIS over the past decade and the main themes we expect will impact GLIS over the next decade.

Getting up to speed - Travel Diary

Japan’s proposed 500km/h Maglev train between Tokyo & Osaka represents another example of the country’s world leading infrastructure.

American Exceptionalism – Travel Diary

The listed infrastructure sector in North America contains many world leading assets, operated by world class companies - and it's growing.

How infrastructure can offer downside protection in your portfolio

We analyse the performance of our fund in falling global equity markets.

Infrastructure as a hedge to inflation

Insulation from the effects of inflation is a key objective for many investors. Find out why some infrastructure assets excel.

Walking on sunshine

Florida is home to world leading infrastructure companies. The US state offers investors exposure to strong demographics, pro-business politics and sensible regulation.

Eat the spaghetti!

The North American railroad sector continues to undergo transformational change, but the execution is not without risk.

Questions your client might ask about investing in listed infrastructure

What is an infrastructure investment?

The main infrastructure asset types include transportation systems like rail, airports and toll roads; communication systems like mobile/cellphone towers; and water, gas and electricity utilities. These assets are essential to the day-to-day functioning of our society. They typically offer more stable returns than many other investment options. 

What are the risks of investing in infrastructure?

The key risks for infrastructure investors are political and regulatory intervention. These risks can be mitigated by diversification across countries, sectors and regulators, and by using an active manager who is able to understand and navigate those risks. Infrastructure investment funds may also be vulnerable to factors that particularly affect the infrastructure sector, for example natural disasters or operational disruption.

Is listed infrastructure an asset class?

In short, yes. While investors have embraced infrastructure as an asset class since the 1990s, the idea of investing in infrastructure via listed securities was developed by a few Australian asset managers between 2005 and 2007. Global listed infrastructure is now widely acknowledged as a standalone asset class by asset consultants, investors and the funds management industry. Today we estimate funds under management in global listed infrastructure to stand at around US$100 billion. It’s also worth remembering that infrastructure assets also have their own risk and return profile; and benefit from structural drivers that can be quite distinct from those of global equities. 

How should I be using infrastructure in my portfolio?

Use of listed infrastructure within investor portfolios has varied over time. Initially we saw it used as a defensive, low volatility equity. This expanded to see it used as a source of income, as declining bond yields increased the relative appeal of its growing divided streams. More recently, we have seen listed infrastructure form part of the real assets segment of investors’ portfolios, due to the nature of its long-life, hard assets and ability to offer insulation from the effects of inflation as well as offer structural earnings growth. We have also seen investors utilise global listed infrastructure as a diversified, liquid and lower fee alternative to unlisted infrastructure allocations.

When should I invest in infrastructure?

You should always seek professional advice if you are unsure about your investment options. Historically, infrastructure investments have generated stable, predictable cash flows and delivered long-term growth. As part of a balanced portfolio these types of investments have tended to be less volatile than other equity classes. Due to these factors, infrastructure can be used through the economic cycle at all times as a lower volatility complement to global equities.

I already get exposure to infrastructure through my global equity fund, why would I need to invest in an infrastructure fund?

You probably get a little bit of exposure - but not very much. We estimate that most global equity managers may invest between 2% and 4% (or less) of their portfolio in infrastructure assets. This exposure could be concentrated amongst a small number of large, well-known utility names. However, much of the alpha generated in our diversified portfolio has come from mid-cap stocks, which are under-researched by global equity managers, such as toll roads, energy storage and mobile towers. If you decide global listed infrastructure suits your investment needs, then an explicit allocation in your investment portfolio would be needed to gain a meaningful exposure to the asset class.

Isn’t infrastructure just a low growth, bond proxy investment?

No. Infrastructure assets offer defensive, non-cyclical growth opportunities from a variety of areas.   

These include: 

  • investment-driven earnings from the build-out of new transmission and distribution assets by electric, gas and water utilities 
  • clean renewable energy replacing carbon emitting, coal-fired electricity generation 
  • increasing equipment on mobile phone towers, to cope with growing data usage on smartphones 
  • rising traffic volumes on toll roads, as a result of urban congestion 

While global listed infrastructure is a relatively interest rate sensitive asset class, it also has long term structural growth attributes. 

Meet the investment team

Peter Meany

Head of Global Listed Infrastructure

Andrew Greenup

Deputy Head of Global Listed Infrastructure

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