October 2019
I NVESTM BRIAN E NT TORA SPOTLIGHT
THE ASSET CLASS WE
CAN’T LIVE WITHOUT With its second anniversary coming up in October, M&G Investments’ Global Listed Infrastructure Fund is well placed to celebrate. We get down to detail as we interview the fund’s infectiously enthusiastic manager, Alex Araujo, exploring not only the reasons behind his passion for the sector but also the disciplined processes which he has put in place to ensure that the fund is well positioned for future success
IFAM: Alex, you’re clearly very passionate about investing in global listed infrastructure. Can you explain to us why you think it presents such attractive opportunities and why you believe it should be on advisers’ and investors’ radar? A A: Infrastructure as an asset class is well-established as a complement to multi-asset portfolios primarily in the private realm. We have observed huge amounts of private capital going into global infrastructure projects and assets over the years. These are investments being made by the likes of sovereign wealth funds, pension funds, endowments and insurance companies etc. where the investment focus is on meeting long term liabilities and with very long term investment horizons. One point of note is that the returns from this sector tend to complement and be generally uncorrelated to other investments held in their portfolios. But private infrastructure investment tends to be for a privileged few. So in a sense, with the launch of our fund in 2017 we have democratised this asset class, providing access to it for investors in a liquid format by way of listed infrastructure businesses with many of the same types of characteristics underlying them as you see in the private
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realm. It is an asset class which is increasingly gaining acceptance within the investment community. Of course, managers will express their exposure to the asset class in different ways and I think it is important to have a number of different infrastructure strategies for advisers and investment managers to choose from. Like any investment strategy, there is differentiation here and it is important to understand this and to embrace it. We ourselves aim to invest in businesses with real physical long life assets with reliable cashflow streams and growing dividends. The characteristics which come from these businesses and assets are incredibly complementary and attractive to investor portfolios. One of the prime characteristics demonstrated by the asset class – and our strategy too – has been its ability to protect capital in more difficult market environments thereby protecting against downside risk. At the same time, because of the way we’re investing and what we’re investing in, we also have the opportunity to capture and participate in any upside when markets move higher. Because of this, I’m sure that advisers can see that we’re not just about offering a defensive strategy here and we are certainly not a bond proxy – which is something of a perception amongst the investment community when looking at this asset class.
I FAmagazine.com
