M&G (Lux) Global Listed Infrastructure Fund
5 min read 15 Feb 22
We believe global listed infrastructure provides a compelling proposition for long-term investors looking to diversify. The asset class has typically benefited from characteristics of higher dividend yield and lower volatility compared to global equities and its investment universe offers a wide array of attractive opportunities to invest in dividend growers.
Funds like the M&G (Lux) Global Listed Infrastructure invest in shares of publicly listed infrastructure companies that own or control physical assets, which provide a strategic barrier to entry. They also tend to exhibit characteristics of lower volatility and higher dividend yield compared to global equities. To provide exposure to the full breadth of the asset class and the quality it has to offer in its entirety, we pick stocks from three different infrastructure categories: ‘Economic’, ‘Social’ and ‘Evolving’ infrastructures. The ‘economic’ category encompasses the traditional cornerstones of infrastructure investing: utilities, energy pipelines and transport (65-75% of the overall portfolio). ‘Social’ infrastructure comprises health, education and civic infrastructure (10-20% of the overall portfolio). The ‘evolving’ sphere is made up of communication infrastructure, transaction networks and royalty companies (15-25% of the overall portfolio).
The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested. Past performance is not a guide to future performance. The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.
Long-term contracted revenue, often inflation-linked, provides a solid foundation for the reliable cashflows generated by infrastructure assets. Inflation-linked revenue is a key feature of the asset class and a key driver of the growing cashflows and dividends we seek, but inflation is not the only source of growth. Listed infrastructure is a beneficiary of long-term structural trends, such as renewable energy, digital connectivity and demographics – powerful themes which we believe will endure for many decades to come.
Inflation has been cited as a concern for listed infrastructure as the asset class has historically shown a degree of sensitivity to short-term movements in bond markets, but we expect the long-term effects for our growth-focused strategy to be different. We welcome economic growth with controlled inflation. Inflation-linked revenue is a key feature of the asset class and a key driver of the growing cashflows and dividends we seek.
ESG considerations are increasingly pertinent to many facets of investing, yet the infrastructure sector merits a specific level of scrutiny. We take this very seriously and all securities we invest in are subject to ESG and Sustainability Criteria checks and analysis, achieved through M&G’s proprietary analysis. In order to ensure that the assets in which we are investing are sustainable over the long term, our exclusions policy applies strict limits to companies exposed to coal-fired or nuclear power generation.
ESG information from third-party data providers may be incomplete, inaccurate or unavailable. There is a risk that the investment manager may incorrectly assess a security or issuer, resulting in the incorrect inclusion or exclusion of a security in the portfolio of the fund.
Higher infrastructure spending around the world may provide a favourable backdrop for listed infrastructure as an asset class, but although we acknowledge the tailwind of fiscal spending, listed infrastructure is a beneficiary of powerful trends which are likely to be more enduring.
Infrastructure sits at the heart of the transition to a net-zero carbon world. Commitments to invest in a green economy should provide a powerful tailwind for companies owning and operating physical infrastructure assets. We are at the early stages of a multi-decade opportunity for these businesses to build and improve infrastructure assets in US and Europe.
We also see excellent prospects for digital infrastructure. Governments acknowledge the critical nature of infrastructure in the digital economy, with universal broadband access having been an integral part of fiscal stimulus packages globally, data centres being beneficiaries of a powerful structural growth trend and communication towers’ companies capitalising on long-term opportunities created by rising internet penetration and mobile data usage. Other dominant themes include transportation of the future, urbanisation, water and waste management and social and demographic shifts.
These thematic tailwinds are likely to persist for many decades to come, creating exciting opportunities for investors.
Please refer to the glossary list for an explanation of the investment terms used in this article. Please note that these links open a new window.
Please note, investing in this fund means acquiring units or shares in a fund, and not in a given underlying asset such as building or shares of a company, as these are only the underlying assets owned by the fund.
The fund holds a small number of investments, and therefore a fall in the value of a single investment may have a greater impact than if it held a larger number of investments.
Further details of the risks that apply to the fund can be found in the fund´s Prospectus.
The views expressed in this document should not be taken as a recommendation, advice or forecast.
The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash.