First State Global Listed Infrastructure Fund (UK OEIC)

Transcription

1 First State Global Listed Infrastructure Fund (UK OEIC) Quarterly Investment Report

2 Contents Portfolio Overview 1 Performance 2 Commentary 3 Portfolio Allocation and Stock Holdings 4 Risk Analysis 5 Disclaimer 6 Risk Factors This document is a financial promotion for the First State Global Listed Infrastructure Fund for professional clients only in the EEA and elsewhere where lawful. Investing involves certain risks including: The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back substantially less than the original amount invested. Single sector risk: investing in a single sector may be riskier than investing in a number of different sectors. Investing in a larger number of sectors helps spread risk. Currency risk: The Fund invests in assets which are denominated in other currencies; changes in exchange rates will affect the value of the Fund. Listed Infrastructure Risk: The Fund may be vulnerable to factors that particularly affect the infrastructure sector, for example natural disasters, operational disruption and national and local environmental laws. Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell. Reference to the names of any company is merely to explain the investment strategy and should not be construed as investment advice or a recommendation to invest in any of those companies. For a full description of the terms of investment and the risks please see the Prospectus and Key Investor Information Document. If you are in any doubt as to the suitability of our funds for your investment needs, please seek investment advice.

3 First State Global Listed Infrastructure Fund Portfolio Overview Investment objective and policy The Fund aims to provide income and grow your investment. The Fund invests in shares of companies that are involved in infrastructure around the world. The infrastructure sector includes utilities (e.g. water and electricity), highways and railways, airports services, marine ports and services, and oil and gas storage and transportation. The Fund does not invest directly in infrastructure assets. The Fund may use derivatives to reduce risk or to manage the Fund more efficiently. Fund Information Fund Launch Date 08 October 2007 Fund Size ( m) UK s Investment Association Sector Benchmark Global FTSE Global Core Infrastructure 50/50 Index* Number Of Holdings 40 Fund Manager(s) Research Rating^ Peter Meany/Andrew Greenup Morningstar :Bronze Square Mile:AA RSM:Rated Fund Yield 3.5% * The benchmark changed from the UBS Global Infrastructure & Utilities Index to the above on 01/04/2015 ^ This does not constitute an investment recommendation and is not indicative of future results. Methodology available on rating provider s website. Available Share Classes ISIN Sedol Share Class GB00B24HJC53 B24HJC5 First State Global Listed Infrastructure Fund GBP Class A (Accumulation) GB00B24HJR07 B24HJR0 First State Global Listed Infrastructure Fund GBP Class A (Income) GB00B24HJL45 B24HJL4 First State Global Listed Infrastructure Fund GBP Class B (Accumulation) GB00B8PLJ176 B8PLJ17 First State Global Listed Infrastructure Fund GBP Class B Hedged (Accumulation) GB00B24HK556 B24HK55 First State Global Listed Infrastructure Fund GBP Class B (Income) GB00B7DYMW38 B7DYMW3 First State Global Listed Infrastructure Fund GBP Class B Hedged (Income) GB00B8P3WM58 B8P3WM5 First State Global Listed Infrastructure Fund EUR Class B Hedged (Accumulation) GB00B2PDR286 B2PDR28 First State Global Listed Infrastructure Fund EUR Class A (Accumulation) GB00B2PDR732 B2PDR73 First State Global Listed Infrastructure Fund EUR Class A (Income) GB00B2PDRD99 B2PDRD9 First State Global Listed Infrastructure Fund EUR Class B (Accumulation) GB00B2PDRL73 B2PDRL7 First State Global Listed Infrastructure Fund EUR Class B (Income) GB00B8HBQ708 B8HBQ70 First State Global Listed Infrastructure Fund USD Class B (Accumulation) For further information Head of European & UK Wholesale Graham Fox +44 (0) graham.fox@firststate.co.uk Sales Director, Europe & Third Party Distributions Marc Bishop +44 (0) marc.bishop@firststate.co.uk Business Development Manager Scotland, North of England & Ireland Ross Stewart +44 (0) ross.stewart@firststate.co.uk Sales Director, South of England & Channel Islands Tom Burton +44 (0) tom.burton@firststate.co.uk Sales Director, Europe Eva von Sydow +44 (0) eva.vonsydow@firststate.co.uk David Gaschik +44 (0) david.gaschik@firststate.co.uk Senior Relationship Manager Hilary Inglis +44 (0) Hilary.Inglis@firststate.co.uk Head of Middle East & Africa Ali Karmali ali.karmali@firststate.ae Head of Institutional Business Development Frank Glennon +44(0) Frank.Glennon@firststate.co.uk 1 FIRST STATE GLOBAL LISTED INFRASTRUCTURE FUND (UK OEIC) - QUARTERLY INVESTMENT REPORT 31 MARCH 2018

4 Performance Annual Performance (% in GBP) to 31/03/18 31/03/17 31/03/16 31/03/15 31/03/14 First State Global Listed Infrastructure Fund FTSE Global Core Infrastructure 50/50 Index Cumulative Performance (% in GBP) to Since Inception 10 yrs 5 yrs 3 yrs 1 yr YTD 6 mths 3 mths First State Global Listed Infrastructure Fund FTSE Global Core Infrastructure 50/50 Index Calendar Year Performance (% in GBP) to 40% 34.9% 32.2% 30% 20% 10% 0% -10% 7.4% 8.1% -0.6% -1.3% 18.7% 19.8% 15.3% 14.8% 6.2% 6.8% 2.4% 0.3% 12.9% 13.3% 7.9% 5.0% -20% -13.6%-13.8% Fund return Benchmark return These figures refer to the past. Past performance is not a reliable indicator of future results. For investors based in countries with currencies other than GBP, the return may increase or decrease as a result of currency fluctuations. Since inception performance figures have been calculated from 08 October All performance data for the First State Global Listed Infrastructure Fund Class A (Accumulation) GBP as at. Source for fund - Lipper IM / First State Investments (UK) Limited. Performance data is calculated on a net basis by deducting fees incurred at fund level (e.g. the management and administration fee) and other costs charged to the fund (e.g. transaction and custody costs), save that it does not take account of initial charges or switching fees (if any). Income reinvested is included on a net of tax basis. Source for benchmark - FTSE, income reinvested net of tax. 2 FIRST STATE GLOBAL LISTED INFRASTRUCTURE FUND (UK OEIC) - QUARTERLY INVESTMENT REPORT 31 MARCH 2018

5 Commentary Market Review Global listed infrastructure gave up ground during the March quarter. Rising geopolitical tension, regulatory headwinds and higher bond yields weighed on most infrastructure sectors. President Trump's 2018 State of the Union address included proposals to support additional infrastructure spending, although a lack of detail left observers underwhelmed. The Fund fell -9.7% over this period after fees, compared to a return of - 7.9% by its benchmark index. Global equities ended the quarter -4.8% lower. Gas and Electric Utilities were among the best performing infrastructure sectors for the period, helped by demand for regulated earnings profiles and stable business models. Towers gained as US operators' structural growth and domestically focused businesses offered a haven from geopolitical uncertainty. Railroads held up well, as recent tax cuts were reflected in higher profits for US freight rail operators. However, reduced investor risk appetite and rising concerns for global trade weighed on the Ports sector. Plans by the US Federal Energy Regulatory Commission to adjust the way that regulated tariffs for some interstate pipelines are calculated affected Pipelines. Satellites dropped as structural headwinds continued to weigh on the sector. Investors' risk-off mood made Japan the best performing infrastructure region. The UK lagged as political and regulatory uncertainty weighed on its utility companies. China and Brazil operate high growth toll roads with well-established concession agreements, providing an essential service to some of the world's most densely populated areas. The Fund holds positions in several North American energy pipeline stocks. Despite improving fundamentals and a back-to-basics approach focused on sensible growth expectations, the sector remains out of favour. This has provided an opportunity for the Fund to build positions in companies that own unique and long life energy infrastructure networks, and which have traded down to appealing valuation multiples. On a more cautious note, the Fund remains underweight airports and some US utilities, which continue to trade at valuations that we find difficult to justify based on company fundamentals. Fund Activity The Fund bought shares in TransCanada, which operates one of North America's largest energy infrastructure portfolios. The company forecasts its distributions to grow at a compound annual growth rate of between 8% and 10% per annum through to The pipeline sector remains out of favour, despite improving fundamentals, presenting an opportunity to gain exposure to these assets at an appealing entry price. The Fund also bought shares in Mexico City-focused toll road operator Pinfra, a stable, conservatively run business with a strong balance sheet. The value of the company's long (32 years) average concession length has, in our view, been underestimated by the market. Pinfra is set to benefit from demand growth as population growth and rising car ownership rates place public roads in Mexico City - already one of the world's most congested cities - under increasing pressure. Holdings in US freight rail operator Union Pacific were sold after 2017's buoyant US economy and corporate tax cuts pushed its share price up to optimistic valuation multiples. A position in Mexican airport operator, GAP, was also sold after rapid volume growth across its portfolio of Mexican airports underpinned substantial outperformance during the Fund's holding period. Outlook The Fund invests in a range of global listed infrastructure assets including toll roads, airports, ports, railroads, utilities, pipelines and mobile towers. These sectors share common characteristics, like barriers to entry and pricing power, which can provide investors with inflationprotected income and strong capital growth over the medium-term. Toll Roads remain the Fund's largest sector overweight. These are high quality companies with stable cash flows, high operating margins and effective barriers to entry. European toll roads are currently going through an earnings upgrade cycle, as improving economic conditions support consistent volume growth in France, Spain and Italy. Peers in 3 FIRST STATE GLOBAL LISTED INFRASTRUCTURE FUND (UK OEIC) - QUARTERLY INVESTMENT REPORT 31 MARCH 2018

6 Portfolio Allocation and Stock Holdings Ten Largest Holdings as at Stock Name Country Sector Portfolio Weight (%) Index Weight (%) National Grid plc UK Multi-Utilities Transurban Group Stapled Deferred Australia Highways & Railtracks American Tower Corporation USA Specialized REITs Dominion Energy Inc COM USA Multi-Utilities NextEra Energy, Inc. USA Electric Utilities Kinder Morgan Inc Class P USA Oil & Gas Storage & Transportation East Japan Railway Co Japan Railroads Southern Company USA Electric Utilities Enbridge Inc. Canada Oil & Gas Storage & Transportation Atlantia S.p.A Italy Highways & Railtracks Sector Breakdown Country Breakdown Electric Utilities 23.5% (28.8%*) Highways & Railtracks 18.5% (9.8%*) Oil & Gas Storage & Transportation 14.8% (11.7%*) Multi-Utilities 13.9% (14.3%*) Railroads 10.7% (8.0%*) Specialized REITs 6.1% (7.4%*) Gas Utilities 6.0% (4.8%*) Marine Ports & Services 2.5% (2.6%*) Construction & Engineering 1.5% (0.0%*) Airport Services 1.3% (8.6%*) Other 0.0% (4.1%*) Cash 1.2% (0.0%*) *Benchmark Weight Sector and Country classifications provided by Factset and First State Investments. USA 43.9% (50.0%*) Canada 11.0% (9.0%*) UK 9.6% (3.3%*) Japan 9.1% (5.0%*) Australia 6.4% (4.6%*) China 5.2% (2.3%*) Italy 3.7% (3.8%*) Brazil 3.2% (2.0%*) France 2.7% (1.4%*) Other 4.0% (18.5%*) Cash 1.2% (0.0%*) *Benchmark Weight Market Capitalisation Breakdown (GBP) % to 500m 500m to 1bn 1bn to 2.5bn 2.5bn to 5bn 5bn to 10bn 10bn to 50bn 50bn to 100bn 100bn+ Portfolio Weight Benchmark Weight Data source: For illustration purposes only. Portfolio weights may not add up to 100% as cash holdings are excluded and full coverage of stocks is not always available. This information is calculated by First State Investments. 4 FIRST STATE GLOBAL LISTED INFRASTRUCTURE FUND (UK OEIC) - QUARTERLY INVESTMENT REPORT 31 MARCH 2018

7 Risk Analysis Portfolio Risk Analysis - Ex-Post 3 Years Annualised to Risk Measure Value Risk Description Beta 0.98 Beta is a measure of volatility relative to the market. A beta of 1 would indicate that the fund tended to move in line with the market; a beta greater than 1 would indicate that the fund has been more volatile than the market; whereas a beta less than 1 would indicate that the fund has been less volatile than the market. Information Ratio 0.81 The fund's excess return divided by its tracking error. It is designed to assess a portfolio's performance relative to its level of benchmark risk. The higher the fund's information ratio, the more excess return it generates for each unit of tracking error. Portfolio Standard Deviation Benchmark Standard Deviation 13.02% A measure of how much the returns of the fund vary relative to the arithmetical average. The higher the fund's standard deviation, the more its returns tend to deviate from the mean % A measure of how much the returns of the index vary relative to the arithmetical average. The higher the index's standard deviation, the more its returns tend to deviate from the mean. Tracking Error 1.87% The standard deviation of the difference between the fund's returns and those of the index. The higher the fund's tracking error, the more its performance relative to the benchmark may vary. Portfolio Risk Analysis - Ex-Ante at Risk Measure Value Risk Description Dividend Yield (Fund) 3.78% The annual dividend yield paid per share divided by the share price. This factor measure the value of company shares according to the stream of dividend income resulting from share ownership. Dividend Yield (Index) 3.54% The annual dividend yield paid per share divided by the share price. This factor measure the value of company shares according to the stream of dividend income resulting from share ownership. Price to Book (Fund) 1.86 The ratio of the company's book value (the sum of shareholders' equity plus accumulated retained earnings from the P & L account) to its share price. This factor has been one of the most successful measures of the intrinsic value of company shares. Price to Book (Index) 2.00 The ratio of the company's book value (the sum of shareholders' equity plus accumulated retained earnings from the P & L account) to its share price. This factor has been one of the most successful measures of the intrinsic value of company shares. Price to Earnings (Fund) Annual earnings (adjusted for amortizations of intangibles, extraordinary charges and credits) per share divided by the share price. This factor measures the worth of a company's ability to support each share with after tax earnings. Price to Earnings (Index) Annual earnings (adjusted for amortizations of intangibles, extraordinary charges and credits) per share divided by the share price. This factor measures the worth of a company's ability to support each share with after tax earnings. Data source: Ex-Post information is calculated by First State Investments, Ex-Ante information is provided by Style Research. 5 FIRST STATE GLOBAL LISTED INFRASTRUCTURE FUND (UK OEIC) - QUARTERLY INVESTMENT REPORT 31 MARCH 2018

8 Disclaimer This document has been prepared for informational purposes only and is only intended to provide a summary of the subject matter covered and does not purport to be comprehensive. The views expressed are the views of the writer at the time of issue and may change over time. It does not constitute investment advice and/or a recommendation and should not be used as the basis of any investment decision. This document is not an offer document and does not constitute an offer or invitation or investment recommendation to distribute or purchase securities, shares, units or other interests or to enter into an investment agreement. No person should rely on the content and/or act on the basis of any material contained in this document. This document is confidential and must not be copied, reproduced, circulated or transmitted, in whole or in part, and in any form or by any means without our prior written consent. The information contained within this document has been obtained from sources that we believe to be reliable and accurate at the time of issue but no representation or warranty, express or implied, is made as to the fairness, accuracy, or completeness of the information. We do not accept any liability whatsoever for any loss arising directly or indirectly from any use of this information. References to "we" or "us" are references to First State Investments. In the UK, this document is issued by First State Investments (UK) Limited, which is authorised and regulated by the Financial Conduct Authority (registration number ). Registered office Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB, number Outside the UK within the EEA, this document is issued by First State Investments International Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registered number ). Registered office: 23 St. Andrew Square, Edinburgh, Midlothian, EH2 1BB, number SCO The fund is a sub fund of First State Investments ICVC ('the Company'), which is an investment company with variable capital incorporated in England and Wales. The Company is structured as an umbrella company. Each fund may issue different classes of share and within each class there may be different types of share. Detailed information about the Company and its sub funds is contained in the Prospectus and Key Investor Information Documents which are available free of charge by writing to: Client Services, First State Investments (UK) Limited, Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB; or by telephoning between 9am and 5pm Monday to Friday; or by visiting Telephone calls with First State Investments (UK) Limited may be recorded. Representative and Paying Agent in Switzerland: The representative and paying agent in Switzerland is BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich, Switzerland. First State Investments (UK) Limited and First State Investments International Limited are part of Colonial First State Asset Management ("CFSGAM") which is the consolidated asset management division of the Commonwealth Bank of Australia ABN CFSGAM includes a number of entities in different jurisdictions, operating in Australia as CFSGAM and as First State Investments elsewhere. The Commonwealth Bank of Australia ("Bank") and its subsidiaries do not guarantee the performance of the fund or the repayment of capital by the fund. Investments in the fund are not deposits or other liabilities of the Bank or its subsidiaries, and investment-type products are subject to investment risk including loss of income and capital invested. 6 FIRST STATE GLOBAL LISTED INFRASTRUCTURE FUND (UK OEIC) - QUARTERLY INVESTMENT REPORT 31 MARCH 2018