Targeting inflation-protected income and steady capital growth from real assets delivering essential services
- Stable and experienced team with the process tested through diverse market conditions for over a decade
- Focus on infrastructure assets which exhibit barriers to entry, structural growth and pricing power.
- On-the-ground due diligence with over 500 company visits per year
Tap into a relatively stable and growing segment of the share market by investing in essential services
Infrastructure assets have the potential to offer investors steady dividend growth, protection from inflation and long-term capital growth. These assets provide essential services - examples range from utilities and toll roads to railroads, ports, airports, energy pipelines, mobile towers and satellites. The listed infrastructure investment universe has a market capitalisation of over US$2,000 billion as at 31 January 2018, and continues to grow due to structural drivers including urbanisation, climate change, globalisation and the digital revolution. This broad and growing opportunity set gives investors the ability to build well-diversified and liquid portfolios. Investors are increasingly recognising that investments in these assets - backed by the right business model - have the potential to deliver attractive long-term returns.
Infrastructure assets can offer lower volatility and some inflation protection, when compared to other equities
As owners of essential assets, infrastructure securities may deliver smoother returns than the broader share market during periods of higher market volatility. Water, power, transportation – these are services that consumers today can't go without, no matter what the stock market is doing. As a result, company cash flows tend to be very stable and relatively immune to economic cycles. Because inflation protection is built into many infrastructure assets’ pricing models, infrastructure can also provide a powerful defence against the adverse effects of inflation.
Gain liquid and diversified exposure to infrastructure, managed by a specialist team
Our investment team constructs high conviction portfolios with appropriate exposure to both infrastructure growth and utilities income, which is important for performance throughout a full economic cycle. We seek to maximise risk-adjusted returns by conducting deep due diligence and then investing in quality companies that are at a discount to our estimate of intrinsic value. Our portfolios are well diversified by sector and country, reducing event, regulatory and political risk. Environmental, social and governance (ESG) issues are fundamental to infrastructure companies, given their significant service obligations and moral accountability to the communities in which they operate. ESG issues have therefore been incorporated into our investment process through our quality ranking model.
Our corporate RI strategy is based upon three strategic pillars of quality, stewardship and engagement.
ESG issues are fundamental to infrastructure companies, given they have significant service obligations and moral accountability to the communities in which they operate.
ESG analysis is integrated into our investment process through our quality assessment and ranking model. This model consists of 25 criteria that influence stock returns in general and infrastructure securities in particular. A score is assigned to each criterion; a lower quality score makes it harder for a stock to be included within the overall portfolio. ESG criteria account for 20% of the overall quality score.
Performance and Documents
Source: First Sentier Investors 2019
Performance returns are calculated net of management fees and transaction costs. Performance returns for periods greater than one year are annualised. Past performance is not a reliable indicator of future performance.
Led by Peter Meany, we consist of nine infrastructure specialists based in Sydney with an average of 15 years of experience.
Our industry experience is enhanced by over 500 company visits each year. We meet with company management, competitors, suppliers, customers, regulators, government officials and industry bodies. The information and insights gleaned from these meetings are our most important sources of idea generation and risk management.