Global Listed Infrastructure: Active Strategies to offer better downside protection going forward
- Global listed infrastructure investors have earned very healthy returns over the past decade.
- Despite increasing allocations in the past decade, the asset class is still under owned by many Superannuation funds.
- Strong secular returns have been underpinned by earnings and distribution growth, lower global bond yields also provided very strong valuation tailwind for the sector.
- Active manager performance has been mixed over the last decade amid rising supply of managers and product options.
- Investors should move away from passive or closet indexing strategies and focus on high active share, high tracking error strategies to experience better downside protection in a rising bond yield environment.
Global listed infrastructure (GLI) as an asset class is still underpenetrated from a strategic allocation perspective. While many Institutional investors have an allocation to Australian and Global listed and unlisted Infrastructure, we believe there is room for significant growth in GLI allocations going forward. Compared to other asset classes, GLI has ranked low in the allocation to ‘bond proxies’ despite the vast opportunity set.