EM infrastructure lags behind
Two infrastructure funds focused on emerging markets have been the worst performers so far this year in the infrastructure sector, according to data.
According to FE Analytics, within the Australian Core Strategies universe, funds in the infrastructure equity sector had an average loss of 12.62% from the start of the year to 30 April, 2020.
The worst performers were the only two emerging market infrastructure funds in the sector: 4D Emerging Markets Infrastructure which lost 24.03% and RARE Emerging Markets which lost 21.34%.
4D’s major regional allocations were 48% in Latin America and 38% Asia Pacific, while Rare’s regional allocations were 70% in Asia Pacific and 25% in Latin America.
In its April market commentary, 4D said COVID-19 and policy responses to the pandemic continued to dominate equity markets.
“Promisingly, there is now broad-based talk of easing the restrictions that have been put in place over the past couple of months to control the spread of the virus,” it said.
“Hopefully, the world is not moving prematurely in this direction. As we move into Phase Two of the pandemic – as defined by the IMF – and the virus is hopefully under control, focus will turn to not only the shape of the economic recovery but also whether the huge monetary and fiscal stimulus measures are inflationary.”
Russell Global Listed Infrastructure $A Hedged lost 19.09%, while $NZ hedged version lost 21.11%.
Pinnacle BNY Mellon Global Infrastructure Yield, which described itself as executing “a rigorous risk management process that strives to limit macro risk exposures” lost 19.52%.
In its quarterly update, it said listed infrastructure was normally a defensive asset reliable in downturns as users continued to travel, pay utilities and energy bills.
“This was largely not the case with the recent downturn due to lockdown-related actions to offset the spread of the coronavirus COVID-19,” it said.
“Additionally, the ensuing economic shutdown and the unravelling of the OPEC [Organisation of the Petroleum Exporting Countries] oil agreement between Russia and Saudi Arabia catalysed a drop in the asset class.
“As things return to normal, we believe these businesses will respond favourably with a focus on stable cash flows and liquidity.”
Worst-performing infrastructure funds versus sector since start of the year to 30 April 2020
Recommended for you
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Following yesterday’s news about First Sentier Investors closing four investment teams, a second global asset manager has announced it is closing its only dedicated Australian fund.
