Infrastructure assets make up ground since GFC
Despite flat inflows over 2012, the global infrastructure securities sector has largely recovered from the losses experienced during the global financial crisis, delivering equity-like returns with lower volatility over the five years to March 2013.
That's according to Lonsec's latest sector review, which found that the global macroeconomic environment — and investor demand for yield — resulted in the sector outperforming the majority of major asset classes.
"Fund managers also have an optimistic outlook for the sector — demand for the services is expected to remain steady, and global structural drivers such as urbanisation, globalisation of trade, mobilisation of data and security of energy supplies are expected to underwrite future growth," Lonsec senior investment analyst Andrew Coutts said.
He said fund managers remain divided over the investment prospects of emerging markets infrastructure as they weigh up strong economic and demographic trends against the risk/return trade-off.
These risks include regulatory and political risk, along with corporate governance, market transparency, liquidity and trading costs, Lonsec stated.
In other findings, Lonsec found that Australian stocks make up a significant proportion of infrastructure portfolios despite being a small proportion of global market benchmarks.
According to Lonsec, this highlights the relative maturity of the local listed infrastructure market, the high asset quality held by listed vehicles and the established regulatory processes.
The ‘benchmark unaware' approach taken by fund managers in recent times has made relative performance difficult to measure, "but the trend of long-term out-performance of major sector indices indicates investors have been rewarded for active management within the infrastructure sector", Coutts said.
Recommended for you
Investment manager Woodbridge Capital has appointed Ben Evans as executive director, origination, joining the firm from Metrics Credit Partners.
Revolution Asset Management has listed its Private Credit Income Trust on the ASX today, offering retail access to Australian and New Zealand private credit.
Northern Trust Asset Management has appointed Anwiti Bahuguna as global co-chief investment officer to succeed Michael Hunstad, who was recently named president of the firm.
Three managed investment schemes have received interim stop orders from ASIC following its private credit review, including two run by La Trobe Financial Asset Management.
