Despite infrastructure securities being a relatively immature sector, Lonsec has increased its conviction in this area as investment managers have shown they can meet above-market objectives.
According to the research house's 2012 Infrastructure Securities Sector Review, investors were particularly attracted by the predictable cash flows, attractive yield profiles and more modest volatility offered by infrastructure securities.
"Over the year to 31 March 2012, both global and domestic infrastructure benchmarks fared considerably better than their broader equities counterparts, a trend which is also observable over the long term," Lonsec's review stated.
Australian companies featured prominently in most portfolios, with Australian-listed electricity distribution company Spark Infrastructure the most popular global infrastructure company, Lonsec senior investment analyst Andrew Coutts said.
Other Australian infrastructure companies appearing in global portfolios included Transurban, DUET Group, Sydney Airport and Asciano.
The review also found that investing in emerging markets (EM) infrastructure can be an effective way to access that particular market, while reducing the risks associated with broader EM equities.
"While the peer group of infrastructure funds is relatively small, the managers within the peer group vary significantly in their approach to investment in emerging markets," Lonsec stated.
As part of the sector review, Lonsec upgraded both the RARE Infrastructure Value Fund and Lazard Global Infrastructure Fund to highly recommended.
