Omega Global Investors has pointed to the growth and returns of its recently launched Global Listed Infrastructure fund as evidence of the benefits of taking a risk adjusted approach to this asset class.
“It’s our contention – supported by the numbers we’re seeing in our fund and its popularity among both institutional and increasingly, retail investors – that the right kind of global listed infrastructure assets can form a vital part of diversified income generating portfolio,” said Omega Managing Director, George Vassos.
“We’ve applied our strategy specifically to deliver an alternative for investors seeking defensive assets that also generate strong yields and certainty of income, minus the volatility associated with equities.”
Mr Vassos went on to explain that the listed infrastructure assets in the Omega fund have a low correlation with international equities. As such, they provide diversification benefits that may not necessarily apply to all infrastructure assets.
“Our portfolio is tilted to higher yielding securities, which means companies with strong balance sheets,” he said.
“The stable yield and high total return from the Fund is a reflection of the strength and monopolistic nature of the companies. What we mean by this is that they don’t have much competition, which translates into sustainable growth and predictable cash flows,” he explained.
There has been much written about the so-called ‘great rotation’, with investors switching from low yielding fixed income back into equities: but that does not tally with Omega’s experience.
“Since its inception in last September, the Omega Global Listed Infrastructure Fund has grown to over $160 million, moving from $95 to $167 million since March alone. The performance of the Fund has also been very strong, equating to 12.56% since inception.”
Mr Vassos attributed the strong performance of the Fund to the sub-sectors represented within it, including integrated regulated utilities, toll roads, water, transmission & distribution, all of which are defensive in nature and provide stable income streams.
“It’s important to understand that this Fund has been designed in line with Omega’s risk-controlled process,” he said. “Our portfolio construction is subject to tightly managing risk and volatility, and we invest in up to 200 global listed infrastructure assets.”
The fund has a major regional exposure to the US, with major sub-sector exposure to integrated regulated utilities such as The Southern Co, Duke Energy Corp and American Electric Power.
“In Australia, we like toll road companies such as Transurban Group,” said Mr Vassos.
In conclusion, Mr Vassos said that when his team was developing the Fund, they focused on the outcome they wanted and worked backwards.
“Investors were looking for liquid exposure to infrastructure, a low correlation to international equities and a consistent, high and stable income stream,” he said.
“And that’s what the Omega Global Listed Infrastructure Fund offers.”