The restrictions on travel have dented the performance of global listed infrastructure (GLI) funds, according to Zenith Investment Partners, but greater downside protection means they have managed to outperform global equities over 12 months.
In its latest Infrastructure sector report, the firm said GLI funds had reported higher returns over the last 12 months to 31 March, 2020 than global equities.
The median manager across the firm’s rated GLI funds lost 9.2% after fees over the last 12 months, compared to losses of 11.1% for global equities.
This was due to a combination of factors including less reliance on short-term business movements, competition, economic conditions and commodity prices than broader industrial equities.
Dan Cave, senior investment analyst at Zenith, said the declines the sector saw were a result of their exposure to the airline and travel sectors but were countered by outperformance from utilities.
“A large contributor to GLI’s negative returns has been the transport-related segments of the infrastructure market (airports and toll roads) which have been some of the hardest hit due to large falls in patronage levels.
“In contrast, regulated utilities have outperformed global equities as their regulated earnings are more resilient due to their essential role in society, especially in a COVID-19 shutdown.”
He said GLI should play a role in an investor’s portfolio as it offered a stable earnings profile and diversification benefits due to its defensive characteristics.