FMOTY 2023: Spotlight on infrastructure
Ahead of the 2023 Fund Manager of the Year Awards on 22 June, Money Management spoke to finalists of the Infrastructure Fund of the Year category.
The finalists in the category are:
- ClearBridge RARE Infrastructure Value Fund — Unhedged
- Colonial First State FirstChoice Wholesale Global Infrastructure Securities Fund
- Lazard Global Listed Infrastructure Fund
Click here to view the full list of finalists.
Given its essential nature and inflation-linked pricing potential, the outlook is bright for infrastructure as an asset class, according to these finalists.
Leroy Qian, investment manager for the CFS Global Listed Infrastructure Fund, noted that the fund had consistently outperformed its benchmark over the last one, three, five, and seven years. Over more recent periods, it outperformed in each of the last three calendar years that saw COVID-19 lockdowns and reopening, the war in Ukraine, and a steep rise in global inflation and interest rates.
“Where global infrastructure has proven resilient in this environment, the fund has delivered an additional layer of outperformance for our clients,” Qian said.
“Colonial First State has the advantage of a longstanding internal investment team specialised in constructing multi-manager and multi-asset portfolios. We have drawn on our experience to select a group of world-class, institutional-grade listed infrastructure securities managers with complementary investment styles and time horizon for this fund.”
The firm holds a positive outlook for the asset class in an environment of enduring inflation, given it had produced above-average returns when inflation was high but moderating.
Qian said: “Looking ahead, high-quality listed infrastructure companies retain inflation-linked pricing or have strong pricing power in growing their revenue, while the essential nature of infrastructure assets sustains user demand. These operating conditions leads to an asset class with predictable and growing income potential.”
Meanwhile, Warryn Robertson, portfolio manager and analyst on the Lazard Global Listed Infrastructure Fund, believes the key to navigating these difficult market conditions was selectivity.
“The combination of volatile equity markets and our conservative approach leads us to view current market conditions cautiously. We see some pockets of attractive value opportunities, particularly in Europe,” Robertson told Money Management.
The fund expects inflation to remain above most central bank target ranges for a number of years ahead and is positioning itself accordingly.
“High bursts of inflation have positive cash flow implications for toll roads, airports, railways, and non-US utilities. In contrast, the implications of higher inflation for US utilities are likely negative. We believe the key to navigating these difficult market conditions is selectivity; identifying the types of infrastructure investments you want to own and only owning those few opportunities which present attractive valuations,” he added.
Net of fees, the Lazard Global Listed Infrastructure Fund had returned 1.2 per cent in the 12 months to 30 April 2023, compared with -5.0 per cent for the MSCI World Core Infrastructure Index. On a three-year basis, it returned 10.6 per cent per annum, compared with the index return of 7.0 per cent p.a.
Robertson said: “In spite of listed infrastructure having a difficult period over the last 12-months, relative to other asset classes, we have continued to perform well. We believe we have been nominated for defending well during this period, and our overall consistency as a manager for a long time. The fund is now in its 18th year and over all time horizons we are ahead of benchmarks.”
Winners of the 2023 Fund Manager of the Year Awards will be announced on Thursday 22 June 2023 at a black-tie gala awards ceremony at The Star in Sydney.
AUTHOR
Rhea Nath
Recommended for you
Family office Lederer Group has progressed its takeover bid for the Elanor Commercial Property Fund, lodging a bidder’s statement with ASIC as it says the fund has been “unable to agree” on negotiation terms.
Magellan Financial Group is keen to enact further strategic expansions with income from strategic partnerships tripling to $31.1 million from the addition of Vinva during FY25.
Outflows have doubled in the property and infrastructure space to $1.3 billion with advisers instead favouring private markets as Morningstar data finds active property funds are struggling to outperform.
Fund manager HMC Capital is seeking to expand fundraising for its private equity vehicle into wholesale platforms now that it has achieved a three-year track record, while scrapping plans for a second fund.
