Macquarie Global Listed Infrastructure

With growing institutional appetite for infrastructure – attracted by stable income and growth – the challenge remains how to access this asset class efficiently.

Infrastructure assets provide services that are crucial for the development and prosperity of a community. Infrastructure companies provide necessities of everyday life: water, gas, electricity, roads, airports, seaports, rail services and  more.

Brad Frishberg

A number of UK pension schemes have clubbed together to create their own collective vehicle, the Pensions Infrastructure Platform (PIP), but for other investors, a range of potential funds is on offer. Macquarie Global Listed Infrastructure is among the best established of these, with the group dominating the sector for more than two decades. According to the most recent Towers Watson Global Alternatives survey, Macquarie is the largest infrastructure investor in the world, with its team offering around-the-clock trading coverage to take advantage of opportunities.A liquid diversifierGlobal Listed Infrastructure invests in companies operating in the sector rather than the assets themselves and co-manager Brad Frishberg sees several benefits to the former approach. “By its nature, a portfolio of listed infrastructure securities provides higher liquidity than an unlisted direct investment or unlisted infrastructure fund,” he adds. “The portfolio’s investments are re-valued each day and trade on global stock exchanges, meaning investors can access daily liquidity and managers can potentially change the fund as required. In addition, given the small amount of capital needed to purchase individual stocks, a listed infrastructure fund can broadly diversify within the market.” On the downside, a listed fund obviously has higher exposure to stock market volatility and also cannot directly influence management of the underlying businesses. Looking at this question of equity risk, Frishberg says many asset classes have experienced a sharp spike in correlation in recent years and infrastructure has not been immune. That said, he notes a much lower correlation pre-financial crisis and believes levels will slowly revert towards that as the global economy continues to recover. “We believe a global fund of listed infrastructure can provide an attractive diversifying component to an overall portfolio,” he adds. “Throughout the economic cycle, global listed infrastructure, as represented by the S&P Global Infrastructure index, has offered competitive performance versus the MSCI World in up and down markets. Perhaps more importantly, the sector has also provided significant downside protection in weaker markets, a key driver of its overall performance.” Exploring the case for the sector in more detail, Frishberg says the assets of infrastructure companies are vital to people’s daily routine. “Your lights are powered by an electric utility, you cook with gas delivered by a pipeline company, your water comes from the local water utility, you drive on toll roads or fly in and out of airports,” he adds. “In other words, infrastructure assets provide the services and facilities that are crucial for the development and prosperity of a community. Infrastructure companies provide necessities of everyday life: water, gas, electricity, roads, airports, seaports, rail services and more.”