Asset manager M&G Investments has launched a global equity infrastructure fund, which it said aims to provide investors with both a growing income stream and long-term capital appreciation.
The fund will invest in companies that own or control critical physical infrastructure that supports global economic growth and in businesses whose assets underpin the day-to-day functioning of society.
The fund will invest in companies that own or control critical physical infrastructure, and in businesses whose assets underpin the day-to-day functioning of society.
Infrastructure stocks generally have inflation-lined revenues. The stable and growing cash flows they generate are typically available in the stock market with a higher yield and lower volatility compared to global equities, the company said.
However, M&G said the fund has a total return objective, aiming to outperform the MSCI AC World Index over any five-year period and to deliver an income stream to unit holders that increases every year.
Graham Mason, chief investment officer for M&G equity, multi asset and retail fixed interest, said that with rising inflation expectations in developed markets, investors are seeking global equity products that can offer diversification, an inflation-protected income stream and strong long-term total returns.
Mr Mason added that he was confident the fund will deliver a new opportunity for clients who want cash flows that have the potential to grow over the long term.
The company said that,as investing in long-life businesses and physical assets requires a resolute focus on sustainability, it will explicitly integrate environmental, social and governance (ESG) considerations into its investment process.
M&G added: “With infrastructure businesses increasingly accountable to multiple stakeholders on ESG-related issues, we seek to mitigate risk, preserve capital and increase our clients’ savings over the long term.”
Provider view:
Fund manager Alex Araujo said: “The fund will invest in companies that own and operate the infrastructure we have come to rely upon in daily life, including utilities, energy and transport infrastructure.
“Owing to their critical, essential nature, demand for these services tends to display resilience throughout the economic cycle. But the infrastructure landscape has had to evolve to support modern-day life, which increasingly depends on digital services and high-speed connectivity. So we broaden our investable universe to include an ‘evolving’ infrastructure class that offers long-term structural growth and compelling investment opportunities.”
Adviser view:
Kate Hewitt, co-owner of Castlefield, said: “The M&G Global Listed Infrastructure fund is reflective of a current trend in that most funds are keen to mention how they use ESG criteria.
“It’s heartening to see more new funds recognising the importance of ESG analysis to gain a holistic picture of risk, even if the way in which they apply that analysis may need to be developed.”
Charges:
1.16 per cent
Verdict:
The launch is shrewd. Volatility should be lower than pure equities, and demand for inflation-protected equity income is only rising. A growth and income mandate could suit a drawdown strategy. A similar product launched by Legg Mason in July 2016 is already over £300m.
