Smooth ride for infrastructure in 2019
Avoiding the spurts of market volatility in 2019, the infrastructure equity sector saw a steady return giving more proof of its defensive credentials.
According to FE Analytics, within the Australian Core Strategies universe, the infrastructure equity sector returned 18.56% over the year to 29 November, 2019.
The best performing fund was AMP Capital Global Infrastructure Securities Unhedged Wholesale, which returned 33.8%.
This was followed by Atlas Infrastructure Australian Feeder Unhedged (29.78%), 4D Global Infrastructure A (29.64%), BlackRock Global Listed Infrastructure (27.6%) and Magellan Infrastructure Unhedged (26.24%).
AMP’s regional weightings were North America (59.76%), Europe (18.71%), UK (11.48%), Asia (5.13%), Americas (2.32%), Australia (2.05%) and money market (0.53%), as of 31 December, 2019.
As noted in AMP’s market review, the volatility in equity markets and continued uncertainty on the future of global monetary policy helped keep infrastructure relevant as a reliable defensive option.
“The volatility in equity markets, together with continued uncertainty on the future of global monetary policy, is likely be supportive of listed infrastructure as the market supports demand for quality defensive assets as an alternative source of income in times of uncertainty,” it said.
“We continue to search for opportunities where we like the company's fundamental growth outlook and valuations present attractive entry points.
“We continue to see the potential for future outperformance as investors seek quality defensive assets that provide sustainable yield profiles in the current low interest rate environment. We will continue to add selectively where we find value.”
4D’s region weightings were Europe (35%), global emerging market (32%), North America (27%) and money market (6%), as of 30 November, 2019.
Their sector weightings were telecom, media and technology (38%), utilities (22%), oil and gas (17%), money market (6%), transport (4%), water (3%) and others (10%).
Magellan’s region weightings were US (39%), Europe (28%), Asia Pacific (21%), Canada (7%), Cash (4%) and Latin America (1%), as of 30 November, 2019.
Their sector weightings were airports (19%), toll roads (16%), integrated power (16%), gas utilities (13%), energy infrastructure (10%), transmission and distribution (10%), rail (6%), communications (4%), cash (4%) and water utilities (3%).
Best performing infrastructure equity funds v sector year to 29 November 2019
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