Infrastructure funds feel hit of travel restrictions
The restrictions on travel have dented the performance of global listed infrastructure (GLI) funds, according to Zenith Investment Partners, but greater downside protection means they have managed to outperform global equities over 12 months.
In its latest Infrastructure sector report, the firm said GLI funds had reported higher returns over the last 12 months to 31 March, 2020 than global equities.
The median manager across the firm’s rated GLI funds lost 9.2% after fees over the last 12 months, compared to losses of 11.1% for global equities.
This was due to a combination of factors including less reliance on short-term business movements, competition, economic conditions and commodity prices than broader industrial equities.
Dan Cave, senior investment analyst at Zenith, said the declines the sector saw were a result of their exposure to the airline and travel sectors but were countered by outperformance from utilities.
“A large contributor to GLI’s negative returns has been the transport-related segments of the infrastructure market (airports and toll roads) which have been some of the hardest hit due to large falls in patronage levels.
“In contrast, regulated utilities have outperformed global equities as their regulated earnings are more resilient due to their essential role in society, especially in a COVID-19 shutdown.”
He said GLI should play a role in an investor’s portfolio as it offered a stable earnings profile and diversification benefits due to its defensive characteristics.
AUTHOR
Laura Dew
Recommended for you
Clime Investment Management has welcomed an independent director to its board, which follows a series of recent appointments at the company.
Ethical investment manager Australian Ethical has cited the ongoing challenging market environment for its modest decrease in assets over the latest quarter.
Commentators have said Australian fund managers are less knowledgeable compared with overseas peers when it comes to expanding their range with ETFs and underestimating the competition from passive strategies.
VanEck is to list two ETFs on the ASX next week, one investing in residential mortgage-backed securities and the other in Indian companies.
