Infrastructure funds outstrip large caps
Listed infrastructure investments have performed well above benchmark defying investor perceptions that they are a defensive equity asset class according to a review of the sector conducted by Zenith Investment Partners.
In its 2015 Infrastructure Sector Review Zenith found that most managers outperformed the benchmark - the S&P Global Infrastructure Index $A (Hdg) — which itself returned 19.9 per cent to 30 April this year.
Zenith, Senior Investment Analyst, Jonathan Baird, said the overall performance of listed infrastructure managers was strong with majority of managers rated by Zenith outperforming the assigned benchmark with the Lazard Global Listed Infrastructure Fund returning at the highest level of 24.3 per cent per annum at April this year.
Unhedged strategies were boosted by currency movements with the AMP Global Infrastructure Securities Fund (Unhedged) posting the highest returns within Zenith's rated unhedged fund universe, of 32.6 per cent per annum as at April this year.
Baird said Zenith had examined the correlations and causes of volatility and returns in the infrastructure sector and currency movements provided "a real tailwind for unhedged strategies versus hedged strategies".
Of the 16 infrastructure products reviewed by Zenith two were rated "Highly Recommended"; 10 "Recommended"; and four were "Not Rated".
The performance figures compared very well with that of the the Australian equity market (as represented by the S&P/ASX 300 Accumulation Index) which generated a return of 10.2 per cent for the 12 months to 30 April 2015.
Large cap managers on Zenith's Approved Product List (APL) performed strongly over the period, with the average large cap manager outperforming the index by approximately 0.3 per cent, on a net of fees basis, but still lower than infrastructure managed funds
In its survey of the large cap sector Zenith found the current make-up of the domestic benchmark and changing macroeconomic factors has led to some segments of the market being overrepresented and that in the next year the the S&P/ASX 51 to 100 segment was the most attractive for growth.
The review looked at an initial universe of 191 large cap products with nine rated as "Highly Recommended", 55 rated as "Recommended", 27 rated as "Approved", 98 as"Not rated" and two were placed on "Redeem".
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