REDPOINT GLOBAL INFRASTRUCTURE FUND CAPTURING THE ESSENCE OF THE ASSET CLASS

Transcription

1 REDPOINT GLOBAL INFRASTRUCTURE FUND CAPTURING THE ESSENCE OF THE ASSET CLASS

2 CAPTURING THE ESSENCE OF THE ASSET CLASS Infrastructure assets are very different to mainstream investments such as shares, property and bonds. The risks they re exposed to, and the factors that influence their revenues, are dissimilar to mainstream assets, so they deliver different patterns of returns. This means they can be a valuable way to increase diversification in an investment portfolio. With investors increasingly seeking reliable income streams, the potential to generate sustainable, inflation linked income and capital growth over time has meant global infrastructure holds appeal for many. However difficulty accessing these types of investments and confusion around what really constitutes an infrastructure asset has left many investors scratching their heads. To add another layer of complexity, many infrastructure funds are more closely correlated with global equities undermining their diversification benefits. These funds tend to focus on generating returns rather than seeking to deliver on the characteristics of the asset class as their primary aim. They also tend to be more heavily weighted to a small number of companies. This is not great news for investors as it means their money is heavily concentrated geographically, by sector and type of infrastructure company which increases investment risk. The team at Redpoint recognised these limitations and devised a solution that would fill the gap for those seeking better outcomes from investing in infrastructure. In 2012, the Redpoint Global Infrastructure Fund was launched to the institutional market and has now been made available to individual investors. We wanted to create a diversified global portfolio of good quality infrastructure assets whose revenues and growth profiles were linked to the underlying growth and inflation in their local economies. Ganesh Suntharam. Investment Director at Redpoint. 2 REDPOINT GLOBAL INFRASTRUCTURE FUND

3 FUND OBJECTIVE The Fund aims to deliver a return (after fees) that exceeds the Benchmark over rolling 5 year periods. BENCHMARK FTSE Developed Core Infrastructure Index (hedged to Australian dollars) with net dividends reinvested. INVESTMENT PROCESS The Fund aims to take a more holistic view of the asset class to achieve the objective of capturing the diversifying characteristics of infrastructure more consistently, efficiently and effectively Start with the right universe: methodically identify infrastructure companies that best meets the Fund s objectives Reduce risk: improve geographic diversification and reduce stock concentration risk Improve return: introduce stock specific, quality criteria to enhance return Outcome: a highly diversified portfolio of listed infrastructure assets that focuses on better quality companies with more sustainable income. 3 REDPOINT GLOBAL INFRASTRUCTURE FUND

4 KEY BENEFITS More stable returns Infrastructure companies often operate in highly regulated monopolies that provide essential services to the community. Utilisation of their products and services tends to be resilient to increases in price and economic downturns. This means revenue streams tend to be more stable than the broader equities market. Diversification benefits Infrastructure assets have different characteristics to mainstream asset classes. Therefore, the Fund can help diversify risk and returns in an investment portfolio that s largely made up of mainstream assets. Access to a broader universe The Fund typically invests in listed infrastructure companies from right across the globe, which is more than most other funds in this asset class. This approach gives Redpoint a broader universe to seek opportunities and importantly helps to reduce risk by increasing asset, sector and geographic diversification in the portfolio. Better protection from inflation and currency fluctuations The usage rates charged by infrastructure companies for their products and services are often determined by regulators, governments or written into long-term contracts. These contracts are typically linked to inflation which means rates can be adjusted to allow for increases in the cost of living. The Fund is also substantially hedged to Australian dollars which helps reduce the impact of currency fluctuations on the Fund s returns. KEY RISKS No investment is free from risk so it s important to understand the risks associated with investing in infrastructure. Political and regulatory risk Different countries are subject to different political, regulatory and legal frameworks. This is particularly relevant in emerging economies with shorter regulatory history where regulatory decisions may be inconsistent. Investing in politically stable regions with established legal and regulatory frameworks can reduce risks for investors. Sub-sector risk Each sub-sector has different risk factors and economic drivers. There is however little correlation among sub-sectors so risks can be significantly reduced by constructing a well-diversified portfolio. Development stage risk Early stage developments are more risky than mature assets so it is important to balance these assets with those with a tried and tested track record. Additional risk is often compensated with higher returns. Emerging asset class Infrastructure is still a relatively new asset class and therefore doesn t have the historical performance record of a number of other asset classes. To find out more about specific risks associated with this Fund, please refer to the product disclosure statement. Better value The Fund s fees are lower than most actively managed global infrastructure funds. This is due to the quantitative approach Redpoint uses to identify infrastructure assets and its efficient processes for making and implementing portfolio construction decisions. 4 REDPOINT GLOBAL INFRASTRUCTURE FUND

5 REDPOINT S ADVANTAGE CAPTURING THE ESSENCE OF INFRASTRUCTURE Redpoint is focused of finding opportunities that demonstrate the essence of the asset class, meaning assets that have the potential to generate sustainable, inflation linked income and capital growth over time. To capture returns more effectively than a market index such as the FTSE Developed Core Infrastructure Index (Benchmark), Redpoint considers assets from a broader universe and often holds companies at significantly different weights. As a result the portfolio is expected to be better diversified by geography and type of infrastructure than many concentrated fundamental managers. Figure 1.1 and 1.2 show how the Fund assets are diversified over region and sector to generate returns and mitigate risk. Figure 1.1 Regional Allocation Regional allocation as at 31 December 2014 Figure 1.2 Sectoral Allocation Sector allocation as at 31 December % 14.8% 10.6% 32.0% 2.8% 4.7% 10.0% 9.9% 6.6% 4.6% 3.1% 19.2% 31.2% United States Europe x UK Canada Japan UK Australia Others Gas, water & multi-utilities Electricity Industrial transportation Oil equipment services & distribution Travel & Leisure Mobile telecommunications A METHODICAL EFFICIENT PROCESS Redpoint applies an active quantitative investment process to achieve the Fund s objectives. The team conduct rigorous analysis of company financial statements and market information to identify stocks that are likely to deliver core infrastructure characteristics. Redpoint believe this disciplined methodical approach to investing can deliver consistently better results at a lower cost to investors. INVESTMENT TEAM One of Redpoint s unique advantages is the depth and breadth of their investment experience. The team has more than 180 years of combined experience gained from a broad range of roles both domestically and overseas. By leveraging their core skills and proven experience, the team aims to deliver exceptional outcomes for clients and create long-term relationships. INVESTOR PROFILE The Redpoint Global Infrastructure Fund may be suitable for investors who want to invest in a global portfolio of listed infrastructure companies and are: > seeking diversification to the portfolio > looking for an income stream which is less volatile than equities > seeking long term capital growth with some income > able to tolerate fluctuations of income and the risk of capital loss. 5 REDPOINT GLOBAL INFRASTRUCTURE FUND

6 FUND FACTS CONTACT US Performance inception date 3 April 2012 Minimum initial investment $20,000 Website Client services: or info@nabam.com.au Adviser services: Please contact your NAB Asset Management Investment Specialist Minimum suggested timeframe 5 years Management fee (including GST, net of RITC) 0.70% per annum of the Fund s net asset value Benchmark FTSE Developed Core Infrastructure Index (hedged to Australian dollars) with net dividends reinvested Typical number of stocks Distribution frequency Quarterly Buy/Sell spread +/- 0.35% APIR Code PPL0031AU Fund ratings Lonsec: Investment Grade Important notice: This information is issued by Antares Capital Partners Ltd ABN , AFSL ( ACP ) as the Responsible Entity and issuer of units in the Redpoint Global Infrastructure Fund (the Fund). Redpoint Investment Management Pty Limited ABN , AFSL ( Redpoint ) is the investment manager of the Fund. This information is general in nature and does not take account of your individual objectives, financial situation or needs. Before making a decision to invest in the Fund you should read the current Product Disclosure Statement and Product Guide (PDS) and consider if it is appropriate for your circumstances. A copy of the PDS is available through the Contacts above. Past performance is not a reliable indicator of future performance. Returns are not guaranteed and actual returns may vary from any target returns shown in this document. Returns are net of fees. Any projection, target statement or other forward looking statement ( Projection ) in this document is provided for information purposes only. No representation is made as to the accuracy of any such Projection or that it will be met. Actual events and returns may vary materially. Any opinions expressed by ACP constitute ACPs judgment at the time of writing and may change without notice. An investment in the Fund is not a deposit with or liability of National Australia Bank Limited ( NAB ) or any other member of the NAB group of companies and is subject to investment risk, including possible delays in repayment and loss of income and capital invested. Neither ACP nor any other member of the NAB Group guarantees the repayment of your capital, payment of income or the performance of your investment. NAB Group does not provide a guarantee or assurance of the obligations of ACP, the Fund or Redpoint. Lonsec: The Lonsec rating (assigned November 2014) presented in this document is published by Lonsec Research Pty Ltd ABN AFSL The rating is a class service (as defined in the Financial Advisers Act 2008 (NZ)) or is limited to General Advice and based solely on consideration of the investment merits of the financial product(s). In New Zealand it must only be provided to wholesale clients (as defined in the Financial Advisers Act 2008 (NZ)). It is not a recommendation to purchase, sell or hold the relevant product(s), and you should seek independent financial advice before investing in this product(s). The rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document(s) following publication. Lonsec receives a fee from the Fund Manager for researching the product(s) using comprehensive and objective criteria. For further information regarding Lonsec s ratings methodology, please refer to our website at: