Lannen said that listed infrastructure, which is typically more defesive, offers investors inflation protection. Demand for infrastructure is generally inelastic, therefore revenues are resilient across market cycles. As a result, infrastructure assets generate a stable return profile and provide lower volatility than global equities and other riskier assets, Lannen and Kempler continued. Investing in infrastructure also offers portfolio diversification, providing lower volatility, stable and sustainable yields.

Investment plans are driving the growth outlook for infrastructure sectors which support the global economy. Lannen highlighted trends such as electrification, decarbonisation, transport and water infrastructure. The firm focuses on ESG and sustainability factors, in particular, to achieve a portfolio that provides lower volatility, inflation protection, income stability and strong ESG credentials. This includes looking at the “S” in ESG, with everything having to be affordable, Georgia Hall, ESG analyst and investment director, told this news service.

Lannen sees opportunities in North American regulated utilities, with 39 per cent of the portfolio allocated there. Electric utilities stand to benefit from clean energy trends including electrification, the rapid growth in artificial intelligence and data centres.

They also see opportunities in listed UK and European infrastructure, with 17 per cent of the portfolio allocated to the UK, 15 per cent to Spain, notably in airports, and 9 per cent to France. Lannen said water infrastructure is a key theme, with large investments in UK water infrastructure, in particular. He told this news service that there has been underinvestment in UK water for many years. UK water bills are also very high compared with the US. Everyone wants cleaner water systems, Hall said.

Pacific Maple-Brown Abbott Global Listed Infrastructure Fund
The Irish-domiciled fund, covered by Article 8 under the EU’s Sustainable Finance Disclosure Regulation, targets undervalued stocks with stable, inflation-linked cashflows that grow over time, with ESG and sustainability factored in. It invests in 31 stocks, positioned to tap into future trends, namely decarbonisation, digitalisation and electrification, with ESG factors integrated throughout. It does not invest in companies, for instance, that derive more than 10 per cent of their revenue from fossil fuel extraction and production or manufacture controversial weapons, military equipment, tobacco, pornography, alcohol or gambling products. The fund, which has outperformed the index over the past one, three and five years, was up 10 per cent at the end of February.

London-headquartered Pacific Asset Management, which has about $21.3 billion in assets under management, acts as the UK and European distribution partner of the fund.

Lannen mainly invests in developed markets, and sees opportunities there, with one investment in a Brazilian toll road. Hall is not planning to do more in emerging markets, as she believes that the volatility is too high. Although the team is Australian-based, they only have one investment in an Australian toll road.

Top 10 holdings include Cellnex Telecom, the largest operator of telecommunications and broadcasting towers in Europe. Getlink is another top 10 holding, which owns the concession to operate the Channel Tunnel until 2086, the only tunnel connecting the UK and Europe. A recent study by London St Pancras Highspeed shows that one in three travellers are flying less for climate reasons.

SSE is also a top 10 holding – a UK energy company that operates primarily in the generation, transmission, distribution and supply of electricity and natural gas, contributing to the UK’s renewable energy sector. The fund invests in Severn Trent, a UK water company. They believe that Severn Trent and United Utilities offer a compelling investment opportunity

Severn Trent has achieved a 4 star environmental performance assessment rating for six years and the highest regulatory capital value growth of the listed names. United Utilities, a UK water and wastewater company serving customers in North West England, also has a positive outlook, with attractive returns expected.    

Exelon Corporation, a US utility company, is another top holding. The fund also invests in Ferrovial SE, a multinational toll road and airport concessions operator. It invests in Aena SME – Spain’s main airport operator. Sempra, a diversified utility operating regulated utilities in southern California and Texas, is another holding. It also invests in National Grid, providing public gas and electric utility services in the UK and US.