Poor returns dogs infrastructure fund
Poor returns on some investment sectors saw the half-year after-tax profits for the Australian Infrastructure Fund (AIF) halved to $11.8 million, its manager reports.
Poor returns on some investment sectors saw the half-year after-tax profits for the Australian Infrastructure Fund (AIF) halved to $11.8 million, its manager reports.
Hastings Fund Management says the utilities sector gave a negative 3 per cent return compared to airports, where AIF’s investments return 9 per cent.
The top performer in airports was Melbourne Airport, which gave the fund a 13 per cent return on its $32 million investment. The poor performer was United Energy, which gave a negative 10 per cent return.
The other two asset classes, telecommunications and transport, gave 5 and 4 per cent returns respectively for the half-year ending December, 1999.
Hastings Fund Management associate director Mitchell King says the result was satisfactory despite it being a difficult period for infrastructure investments.
“The diversified nature of the assets in AIF have provided some protection from falling values in the sector,” he says.
“Increased interest rates drive down values in the listed market, but AIF has 92 per cent of its investment in unlisted assets.”
As part of the active management of the fund, Hastings sold its 1.3 per cent stake in Auckland International Airport for $13.2 million, giving shareholders a 65 per cent return on their original investment of $8.2 million.
King says the fund looked at two offshore projects during the half year, but decided against investing in either. One was a tollroad project in Canada and the other a telecommunications company in Japan.
“We are still looking for investment opportunities in infrastructure projects,” he says.
The arrival of more competitors in the Australian airline market is expected to boost revenues for the airports AIF has investments in.
AIF has stakes in Melbourne and Brisbane, with the latter benefiting from Virgin’s decision to make the airport its headquarters.
“The evidence in offshore markets shows new entrants into the airline market creates additional volume in passenger traffic,” King says.
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