Waddington boosts infrastructure position
Insight Investment multi-manager Steve Waddington has adopted an ultra-bullish 14 per cent weighting in infrastructure investment trusts.
The manager has ploughed into the Hicl, John Laing Infrastructure and 3i Infrastructure trusts.
He said he was hoping to secure a “long-term, predictable income stream” with the trusts, from an asset class that is less exposed to the macroeconomic chaos being caused by the eurozone debt crisis.
The positions represent the highest ever weighting in infrastructure in the manager’s flagship £121.1m Diversified Target Return fund. “We are getting some negative market moves at the moment in the context of political and macroeconomic uncertainty but infrastructure investments are providing a stable return profile,” he said.
In March prime minister David Cameron unveiled a series of ambitious infrastructure plans to help boost the UK’s flagging economy. The plan centred around a strategy of encouraging the private sector to fund projects from roads and rail to airports and power stations.
He has also announced £2bn of investment by pension funds into infrastructure by 2013.
Mr Waddington said his infrastructure investment trust holdings often traded in companies participating in UK private finance initiatives (PFI) – the area that will benefit from the government stimulus package.
“For instance, Hicl invests in schools and as long as the school is functioning the investment trust gets paid,” Mr Waddington said.
The manager added that Hicl, which is a top 10 holding at 4 per cent of the fund, had delivered a total return of 7.7 per cent in the past year compared with a fall in the FTSE of roughly 4 per cent, as at June 18.
Hicl paid an interim dividend of 3.35p per ordinary share in December 2011 and the share price over one year to June 18 has risen more than 4 per cent to 120.2p.
“A lot of the return has come from the income from the dividends but compared with other asset classes it looks attractive,” Mr Waddington added.