The ACS Equity – Infrastructure and ACS Property – Global sectors might be two sectors investors choose to avoid, considering their long-term track record of underperforming funds with above-average volatility.
Money Management analysed the performances of each sector over a five-year period to determine which sector had the highest percentage of undesirable funds.
The two-Crown average Australian infrastructure equities sector holds the highest percentage of funds underperforming at an above-average volatility, with a whopping 66.7 per cent missing the metrics.
Director at Real Asset Management, Michael Frearson, said while the long-term earnings characteristics from infrastructure assets could be attractive for investors, domestically, we struggled with valuation and ease of access to unlisted infrastructure deals, causing an underperforming sector.
“Given the global chase for yield and low levels of domestic interest rates, we have seen asset prices move to fully valued, where it is not clear investors are adequately compensated for liquidity and operating risks,” he said.
Frearson said an area that could be further developed was the potential for the Government to issue infrastructure bonds for key projects, which would enable greater retail investor participation in this asset class.
“The long-term nature and inflation protection within the bonds can be attractive to long-term investors,...