Confidence in airports despite COVID-19 closures


Infrastructure fund manager Sarah Shaw has admitted airports failed to provide the expected defensiveness but said she remained confident in their future.
In a roundtable, Shaw, who manages 4D Global Infrastructure, said the temporary closures of airports during the COVID-19 pandemic was an “unusual situation”.
Airports had been an increasing weight in infrastructure funds as they offered numerous sources of revenue and acted as a defensive allocation but this caused problems when they closed due to the travel restrictions.
Shares in ASX-listed Sydney Airport and Auckland International Airport fell 31% and 33% respectively since the start of the year to 25 May, compared to losses by the ASX 200 of 14%.
Shaw said: “This was an unusual situation and airports have seen an economic impact from COVID-19 but they have reacted well and tried to cut their fixed cost as much as they can, putting staff on hold and addressing liquidity conditions.
“There will be a hard impact on airports in 2020, they justify a correction but not the 40% to 50% that we have seen. I agree they have not been defensive assets but now we are expecting them to re-open faster than forecasted.”
She said the fund, which had 8% in airports, would not be these exiting these positions but that it was rotating into larger positions to utilities as the earnings of these type of companies were more resilient. Exposure to electric and gas utilities was 29% of the fund, its largest weighting.
Meanwhile, she said there was a strong case for increased infrastructure investment as a form of recovery as the world came out of lockdown.
“For every $1 invested in infrastructure, there is a $3-4 economic impact, infrastructure can fast-track an economic recovery and we saw that in China’s investment in high-speed rail after the Global Financial Crisis. Europe especially is fast-tracking investment in green energy.”
The 4D Global Infrastructure fund lost 3% over one year to 30 April, 2020, versus losses of 4.4% by the infrastructure sector.
Share price performance of Sydney and Auckland Airport versus ASX 200 since the start of the year to 25 May 2020
Recommended for you
Australian equity ETFs attracted record inflows of $3.2 billion in 1Q25, while heightened volatility led to a decline in flows for global equity ETFs, according to Vanguard.
The failure of a clinical trial by biotech firm Opthea has caused shares in its backer Regal Partners to decline 52 per cent year-to-date and hit its funds under management, quarterly flows show.
GQG Partners has revealed its quarterly flows for the first three months of 2025 were up 5.8 per cent, after a difficult final quarter of 2024 as a result of institutional redemptions.
Global asset manager Janus Henderson has signed a strategic partnership with life insurer Guardian Life, which will commit US$400 million to accelerate the firm’s fixed income development plans.