InvestmentsNov 3 2015

Legg Mason to push infrastructure onto platforms

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Legg Mason to push infrastructure onto platforms

Legg Mason is to push for its listed infrastructure funds to join UK platforms after its recent acquisition of Australian manager Rare Infrastructure.

Rare, founded by Nick Langley and Richard Elmslie in 2006, ran two offshore Dublin-based listed infrastructure funds prior to being bought by the US firm.

Legg Mason now hopes the funds will make their way onto platforms to attract UK retail investment. The Baltimore-based company is also holding discussions with a discretionary fund manager this week.

Adam Gent, head of UK sales at Legg Mason, said: “A lot of clients can access Dublin funds now [via platforms] but we are looking to develop [new products] where appropriate. There is a timeline in place to launch new propositions.”

Platforms do not traditionally hold offshore funds in the UK according to the Lang Cat, a platform consultancy. Founder Mark Polson said there were not many platforms that offered access to offshore funds because of technical differences and a lack of demand.

He said: “The tax systems on UK platforms are aimed at UK taxpayers, so cross-border demand [does not normally stem from] here. There are more natural places to go.”

The Dublin funds – Rare Infrastructure Value and Rare Emerging Markets – are £147.5m and £13.4m in size respectively. Rare’s total $6bn (£3.9bn) assets under management are split, with 60 per cent from institutional investors and the remaining 40 per cent from retail investors living predominantly in Australia and Canada.

The funds invest in companies whose main business is the provision of infrastructure assets that provide revenue driven by the use of underlying assets. The funds consist of what Rare said is a diversified portfolio of infrastructure companies by sector and region.

Mr Langley said: “We want firms that have hard assets, provide an essential service, and get paid for making those assets available.”

It holds shares in firms that supply essential services, and where the foundation infrastructure asset can also provide income, inflation protection, and a “steady return”.

Mr Langley said the firm invests in two categories: defensive stocks consisting of high-income infrastructure companies that provide regulated utilities, and GDP-exposed stocks that manage infrastructure involved in moving people or goods around an economy.

Rare’s Emerging Markets fund lost 10.7 per cent in the year to September 30 compared to a 9.6 per cent fall in the S&P Emerging Market Infrastructure index, according to Legg Mason.

The Value fund, meanwhile acheieved an annualised returned of 9.2 per cent over three years to September 30 compared to the S&P Global Infrastructure index return of 10.8 per cent, Legg Mason reported.