SMSF trustees making allocations to infrastructure in their portfolios need to educate themselves about the significance of using an active strategy in order to get the most out of this asset class.
“One of the things that I think is often misunderstood about unlisted assets is the importance and extent of the role that active management plays,” AMP Capital Core Infrastructure Fund manager John Julian said during a recent webinar.
“Investing in unlisted assets is a very different proposition to investing in listed securities where you are typically just another investor on the share register with limited access to information and limited ability to influence the company.”
By way of contrast, AMP Capital’s approach to investing in an unlisted infrastructure asset involved taking either a controlling stake or, in some circumstances, a less-than-control position where it had strong influencing rights, Julian noted.
“We always take seats on the boards of unlisted assets that we invest in and we’re heavily involved in determining and influencing the strategic direction of the assets,” he said.
“We also work very closely on a day-to-day basis with the management teams within the assets in order to drive returns and manage risks within the assets so as to provide the best investment outcomes that we possibly can to our investors.
“In doing this, we utilise our in-house expertise from our global team of around 65 infrastructure investment professionals, which includes a significant number of people we’ve recruited out of industries we invest into – these are people with hands-on, operational expertise in running and operating infrastructure businesses.”
He added that an exposure to unlisted infrastructure assets had a number of benefits.
“Unlisted assets have a low correlation with listed markets, which can bring diversification benefits to a portfolio, and in addition unlisted assets typically exhibit low levels of volatility, which is a common means of measuring investment risk,” he noted.
The AMP Capital Core Infrastructure Fund’s portfolio contains a number of assets among the largest and most important assets in their sectors in their respective countries, such as Melbourne airport, Angel Trains in the United Kingdom and Powerco in New Zealand.
