GLIS growth to be stumped by de-globalisation concerns
Despite favourable returns since 2007, the global listed infrastructure securities (GLIS) asset class may be stumped by political and legal risks arising from de-globalisation as a result of rising economic nationalism, according to Colonial First State Global Asset Management (CFSGAM).
In a whitepaper released this week to mark 10 years of investment in infrastructure via listed securities, CFSGAM deputy head of global listed infrastructure, Andrew Greenup has pointed to de-globalisation concerns as a key concern for the next decade.
“Brexit and Trump make it hard to ignore the potential impact of rising economic nationalism, especially when it comes to the two countries – that have done the most to construct the global liberal order,” he said.
“In the context of the GLIS asset class, this has the potential to increase political and legal risks if this populism continues or spreads.”
Greenup said government intervention in electricity and gas markets in low political risk countries had risen in the past 12 months, with de-globalisation the risk factor with the potential to reverse well-established trade flows.
“[This] could reduce the value of infrastructure assets that support global trade including ports, freight railways and some road tolls,” he said.
“Just because business model disruption in infrastructure has been limited over the last decade, does not mean it won’t happen in the future.”
Other potential issues touted by CFSGAM included increased fund flows into GLIS from the demand for low volatility, and income producing assets as baby boomers looked to preserve capital and draw on retirement savings.
Greenup said the GLIS asset class generated returns of nine per cent per annum, with a standard deviation of 11 per cent per annum, had still compared favourably when compared with global bonds (eight per cent per annum), global equities (six per cent per annum), and global property securities (three per cent per annum).
AUTHOR
Hope William-Smith
Recommended for you
Fund managers may be operating in a squeezed environment, but a salary guide shows they are willing to pay up for specialist talent to diversify their fund range.
Reach Alternative Investments has entered into a strategic partnership with Russell Investments to bolster its wholesale private markets offering for financial advisers and investors.
Boutique investment consulting and research house Genium Investment Partners has announced a senior appointment to drive further growth in its research ratings business.
Nuveen has appointed a global head of estate, a successor to Chris McGibbon who steps down after almost 25 years.
