The global listed infrastructure sector has been a major winner in terms of net fund flows for the past decade while Australian listed property managers struggled mostly with outflows, according to a Morningstar’s study.
Morningstar’s ‘2017 Listed Property and Infrastructure Sector Wrap’ found that a sharp jump in bond yields during the second half of 2016 reignited questions about its effect on the listed property and infrastructure sectors.
According to the authors of the study, valuations of these sectors rose as market interest rates fell so it was natural to question whether they could suffer if bond yields increased.
Although both sectors struggled when yields rose in the second half of 2016 and during the mid-2013 taper tantrum, global listed infrastructure tended to fare better than listed property as it had a greater variety of industries, including these economically sensitive, the study found.
Also, investments in passive Australian listed property vehicles would “make a lot of sense”, according to Morningstar, as many active portfolios were quite similar to the index and there was little dispersion of returns across the manager universe.
“Highly credible active strategies exist, but low-cost passive options remain hard to beat,” the study said.
Morningstar also announced that it had decided to allocate its second-highest-possible Analyst Rating of Silver to two infrastructure strategies: Magellan Infrastructure and Lazard Global Listed Infrastructure.
At the same time, five Australian and global listed property strategies received Morningstar’s highest-possible Analyst Rating of Gold. These were:
- BT Property Investment
- Resolution Capital Global Property Securities
- BlackRock Indexed Australian Listed Property
- Vanguard Australian Property Securities Index
- Vanguard Australian Property Securities Index ETF
However, Morningstar downgraded UBS Clarion Global Property Securities to Silver from Gold, Antares Listed Property to Bronze from Silver and both AMP Capital Listed Property and AMP Capital Global Property Securities to Neutral from Bronze.
At the same time, Lazard Global Listed Infrastructure was upgraded to Silver from Bronze while both FirstChoice Global Infrastructure Securities and Ironbark Paladin Property Securities were upgraded to Bronze from Neutral.
