Andy Parsons, advice team manager at The Share Centre, explains how investors looking for long-term capital growth with the potential for inflation protected income could benefit from the First State Global Listed Infrastructure fund.
 
Global governments continue to stimulate economic growth by filtering billions of dollars into infrastructure-based projects. As such, infrastructure funds are proving to be an attractive option for investors.
 
Infrastructure funds invest in businesses involved in strategic assets such as road, rail, sea ports, gas, electric and water utilities. As such, the companies are recognised as being defensive and mature, suggesting reasonable levels of dividends and dividend growth.      
 
The First State Global Listed Infrastructure fund invests in a diversified portfolio of listed infrastructure and infrastructure-related securities from around the world, with 31.3 per cent of its asset weightings in North America and 42.1 per cent in Europe. It aims to achieve a total investment return consistent with income and long-term capital growth.
 
The fund is suitable for investors wanting global equity exposure while retaining a defensive and more balanced return. However, it’s worth bearing in mind that, due to the nature of the underlying companies the fund invests in and the time it takes for completion of projects, investors should be comfortable with a minimum five-year time horizon.
 
The fund is managed by Peter Meany who has more than 11 years experience in global infrastructure securities, having previously worked as an analyst for Credit Suisse and Macquarie Equities.
 
In 2008 the fund clearly demonstrated its defensive capabilities by limiting downside losses to 13.61 per cent. In 2009 it returned a positive return of 13.28 per cent. It currently yields 3.28 per cent, however, inflation protection is not guaranteed. This yield is indicative of the very nature of infrastructure projects, in that the underlying investments are in sectors with predictable cash flows.
 
For investors comfortable with investing in overseas markets who are seeking to add a defensive quality to their portfolio with a balanced return, the First State Global Listed Infrastructure fund could prove to be the perfect choice.