First State Global Listed Infrastructure fund
Sheridan Admans, investment research manager at The Share Centre, highlights infrastructure as a key sector for fund investors and recommends the First State Global Listed Infrastructure fund.
"Infrastructure is a significant investment theme that should not be overlooked by investors. It is the strength and integration of an economies infrastructure that in the long-term determines its competitiveness. Investment is driven by structural drivers such as urbanisation, globalisation of trade, mobility, communication and security of energy to name a few. Infrastructure investment also tends to be more defensive, has earnings transparency and inflation beating income returns.
"Infrastructure could see a boost from pension fund investment as well as sovereign wealth funds in the years ahead as they seek to diversify away some risk they are exposed to in credit markets, it may also enable them to match liabilities while maintaining a hedge on inflation. The UK Government has been vocal in its wish to encourage such investors to support strategic infrastructure projects in the future.
"Investment in infrastructure in regions like China is likely to mean new facilities, where as in the US and Europe it is likely to result in upgrading current facilities and the improvement of their efficiency.
"A fund that offers this exposure is the First State Global Listed Infrastructure fund, managed by Peter Meany. It invests in companies involved in projects such as airports, sea ports, gas, electric and water utilities, toll roads, communication networks, oil and gas pipe-lines.
"These companies tend to be defensive and mature, suggesting reasonable levels of dividends and dividend growth. This is further aided by high barriers to entry, strong pricing power, sustainable growth and predictable cash flows making the asset class a relative safe haven in an uncertain financial world.
"This provides an investor with a lower risk exposure to the major themes that support economic growth and is suitable for investors wanting global equity exposure, whilst retaining a defensive and more balanced return."