First State Global Listed Infrastructure fund
Sheridan Admans, investment research manager at The Share Centre, highlights infrastructure as a theme for investors and picks the First State Global Listed Infrastructure as his fund in focus.
"Infrastructure investment continues to be a major theme for investors and is likely to make the headlines for years to come.
"It is the strength and integration of an economy's infrastructure that in the long-term determines its competitiveness and in the shorter term helps stimulate the marginal propensity to consume. Investment is driven by structural drivers such as urbanisation, globalisation of trade, mobility, communication and security of energy.
"Investment in infrastructure isn't confined to the UK. A key focus in many countries around the world is on the stimulation of economic growth as governments seek to improve their internal strategic assets like road, rail, sea ports, gas, electric and water utilities.
"Developed nations should be expected to invest large amounts of money to repair and update their infrastructures, whilst emerging market economies invest heavily in infrastructure projects in order to promote industrialisation, urbanisation and maintain economic momentum.
"A major demand for infrastructure investment in emerging economies is driven by the demand and supply of raw material and facilitating the movement of those materials, which should over time drive supply and demand for other imports and exports.
"The First State Global Listed Infrastructure fund provides an investor with a lower risk exposure to the major themes that support economic growth. The fund is managed by Peter Meany and is suitable for investors wanting global equity exposure, whilst retaining a defensive and more balanced return.
"In emerging economies, more of the population are moving from the country into the city as they become influenced by the Western world, causing infrastructure to come under strain and need to be improved."
"The fund has recently benefited from M&A activity in the regulated and integrated utility sector, which currently makes up the funds largest sector exposure of 41.7%. Its second biggest sector exposure is airport, toll roads, freight, rail and passenger rail followed by towers and satellites. Its largest region exposure is currently the US followed by France and the UK.
"The fund is managed on a high convictions basis. It typically invests in around 40 stocks, which is concentrated when compared to the broad universe of funds. It can invest up to 20% for the portfolio in emerging market companies, however this is down to the manager's discretion and subject to the funds strict investment criteria."