Infrastructure funds: which are particularly attractive

by Julia Groß, Euro am Sonntag

NAccording to various fund managers, the environment for selective investments in infrastructure stocks is currently right: Valuations are cheap, high government investments are imminent in Europe and the USA in the coming years, and the stocks are known for above-average performance in times of higher inflation.

“Toll road operators from Europe, Asia-Pacific and Latin America present exceptional buying opportunities given current valuations,” writes Peter Meany, head of global infrastructure equities at First Sentier, in a recent comment. Companies such as France’s VINCI have suffered fewer losses than feared over the past two years, as traffic on popular routes has proven to be relatively robust. Now they should soon benefit from the increasing normalization of transport and individual traffic.

Rising interest rates increase borrowing costs when it comes to financing repairs or new buildings. “However, the concessions negotiated with local governments to operate toll roads contain explicit annual adjustments of toll road charges to inflation,” explains Johannes Maier, portfolio manager for global infrastructure equities at Bantleon. He also thinks utilities that are pushing carbon neutrality are attractive after the price corrections of the past few weeks. The expansion of renewable energy generation will be massively accelerated in order to achieve the climate goals contractually agreed in the Paris climate agreement. According to the International Energy Agency, annual investments in clean energy must quadruple to $4 trillion per year by 2030. Companies like the Italian energy group Enel benefit.

Maier also expects strong growth in the area of ​​digital infrastructure, such as the fiber optic network, radio towers and data centers. “Efficient Internet has become an essential infrastructure since the outbreak of the pandemic at the latest,” he says. Customers are increasingly willing to pay more for it.

Historically, the return on listed infrastructure companies has been higher than the inflation rate. In phases when the US consumer price index was more than three percent, the sector even outperformed the MSCI World by ten percentage points per annum.

Promising: First Sentier’s infrastructure equity fund invests about half of the portfolio in the US and the rest of the world. The focus is on suppliers and specialists for rail and road infrastructure.

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Image sources: Netfalls – Remy Musser / Shutterstock.com, Juergen Faelchle / Shutterstock.com