Airports add value to unlisted infrastructure portfolios
The airport sector, which has a strong track record of long-term growth in Australia and has been a strong driver for unlisted infrastructure portfolios, is expected to offer more opportunities in the current low interest rate environment, according to specialist unlisted infrastructure manager Infrastructure Partners Investment Fund (IPIP).
Also, the sector delivered only two years of negative passenger growth in Australia over the last 30 year and, on top of that, investors should consider this asset as two separate businesses: airside and land-side.
Jonathan van Rooyen, Chief Investment Officer at IPIF, said that unlisted infrastructure in a portfolio sat between government bonds and equities in terms of risk and return, making it an excellent portfolio diversifier.
“Unlisted infrastructure’s potential for stable, reliable income and capital growth is derived from long-term, stable and predictable cash flows, typically underpinned by long-term contracts or a regulated asset base, with high visibility of income and revenues often linked to inflation.
According to IPIF, unlisted infrastructure investments accounted for between 5-15% of major institutional investor portfolios, including Australia’s two largest investors, the Future Fund and Australian Super.
“The airport sector performed well, recovering resiliently through multiple macro and industry shocks such as the global financial crisis, with airlines managing the down cycle through a range of initiatives including discounted ticket prices and reduced services for example,” van Rooyen said.
AUTHOR
Oksana Patron
Recommended for you
Lonsec and SQM Research have highlighted manager selection as a crucial risk for financial advisers when it comes to private market investments, particularly due to the clear performance dispersion.
Macquarie Asset Management has indicated its desire to commit the fast-growing wealth business in Australia by divesting part of its public investment business to Japanese investment bank Nomura.
Australia’s “sophisticated” financial services industry is a magnet for offshore fund managers, according to a global firm.
The latest Morningstar asset manager survey believes ETF providers are likely to retain the market share they have gained from active managers.
