Australian investors are too quick to turn to Australian-only infrastructure solutions like Transurban, with many believing that active managers are the best way to get returns from infrastructure, according to ETF Securities.
At the same time, infrastructure assets were often perceived as a favourite equity asset class for savvy retiree portfolios as the type of company involved tended to have a monopolistic position in an area of infrastructure where demand was predictable.
This was one of the reasons why ETF Securities decided to launch its ETFS Global Core Infrastructure ETF (CORE), the company said, as infrastructure was additionally often under-represented in Australian investor portfolios.
“This is actually the point of infrastructure assets though. Not to reach giddy heights, but not to fall to incredible lows. To produce stable income with low volatility. Precisely what many retirees want,” the company said.
Further, there was a common belief that infrastructure was best invested in via active managers, with many believing that infrastructure required a fund manager to explore every dam and toll road personally to ascertain whether it was suitable for investment, but the performance of some index-tracking funds would suggest this is simply not the case, ETF Securities said.
Also, CORE was the only infrastructure ETF in Australia that runs a smart-beta strategy to dynamically adjust its portfolio to reflect prevailing market conditions, the company said.
CORE did not have a significant concentration in any company, with the top ten stocks representing only 21 per cent of the portfolio, meaning no one stock was able to significantly impact performance of the fund.
