Other sectors may have struggled during the recession, but infrastructure has thrived, says Peter Meany, manager of the First State Global Infrastructure Fund. After all, the world always needs roads, pipelines, and utilities.
“Revenues are not dependent on demand and long-term contracts are inflation-protected,” says Charles Cade of Numis in The Daily Telegraph. As a result, Meany’s fund has returned 11.2% over the past year and the yield has grown every year since 2007 – it’s currently offering 3.2%. Meany has ten years’ experience of investing in infrastructure and believes his fund’s success is partly down to its diversity (he invests globally and across several different types of business).
But he is sceptical about investing in emerging markets. As Emma Wall notes in The Daily Telegraph, a lack of regulation means that “should a road in China become congested, another one is likely to be built parallel to it”, making it hard to gain market control. “We have a maximum limit of up to 20% that can be invested in emerging markets,” says Meany. “But at the moment it is more like 10%.”
His holdings include Charles de Gaulle airport in Paris. He chose it because of the lack of competition it faces. “A large shopping mall such as Westfield can charge retailers 12% of their revenue. But an airport has a monopoly on those retailers and can take up to 35%.” Another major holding is toll road group Vinci.
“Infrastructure will be a major investment theme for many years to come… and First State has first-class team with the ability to exploit the potential in this area,” says Mark Dampier of Hargreaves Lansdown.
Contact: 0800-587 4141.
First State Global Infrastructure Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Vinci | 6.7 |
| Crown Castle International Corp | 5.1 |
| Central Japan Railway Co | 3.8 |
| National Grid | 3.6 |
| PPL Corp | 3.6 |
| Atlantia Spa | 3.6 |
| Koninklijke Vopak | 3.6 |
| E.On AG | 3.2 |
| Exelon Corp | 3.2 |
| FPL Group Inc | 3.2 |