Infrastructure returns disappoint on the defensive side
Researcher van Eyk’s latest infrastructure review shows the asset class has been disappointingly less defensive than expected in the market downturn, although its prospects are better.
It found the sector returned -32.3 per cent over the last 12 months to April 30, based on the UBS 50-50 infrastructure index, making it one of the worst performing periods in the asset class' history.
“The result was disappointing given that we expected the sector to have been more defensive relative to traditional Australian and global equities” said van Eyk investment analyst Jo Chan.
Chan advised investors not to look at infrastructure as one homogenous sector, since the different infrastructure sub sectors can vary significantly.
“As an example, regulated utilities returned -7.2 per cent compared to airports, which returned -36.3 per cent," he said.
The survey also revealed prospects for improved infrastructure are better going forward and there is a strong case for active management in the sector.
“Over the past few months there [have been] clear signs that systematic risks have continue to dissipate," Chan said.
For this reason, van Eyk believes that global listed infrastructure funds can provide a good opportunity for investors to rotate back into the equities, he said.
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