Infrastructure assets may provide investors with a reliable income stream as the need for private sector involvement in infrastructure funding continues to grow.
According to the latest Zenith Investment Partners 2012 sector review, the S&P/ASX Global Infrastructure Listed Index (Australian dollar hedged) has returned over 18 per cent for the 12 months ending 30 September 2012.
Given the ongoing fiscal issues resulting in privatisation of state-owned infrastructure assets in Southern European and various other developed nations, Zenith said there is a significant pipeline of private investment opportunities.
According to Zenith, infrastructure assets typically provide a long-term reliable income stream that is largely resilient to changing economic conditions and protected from inflation.
Investors must keep in mind, however, the level of regulation and the perceived security that such an investment might provide, Zenith investment analyst Jonathan Baird said.
"Zenith believes that over the longer-term, the inclusion of listed infrastructure in an investor's international equities exposure provides significant diversification benefits, with the potential to improve the risk/return profile of the overall portfolio," Baird said.
Of the eight global funds reviewed, Zenith awarded both the Australian hedged and unhedged RARE Infrastructure Value Fund, and the Magellan Infrastructure Fund, a highly recommended rating.
This was followed by CFS Wholesale Global Listed Infrastructure Securities, Lazard Global Listed Infrastructure Fund and RARE Series Emerging Markets Fund, which were all given a recommended rating.