Investment Research

Global Infrastructure: Income Certainty and Stable Growth

Published: 13th November 2019

The global economy is showing signs of strain and expectations from investors around growth and income is decreasing.

Can global infrastructure assets provide a solution?

Infrastructure has long been a favourite equity asset class for investors as it offers the following characteristics:

  • Access to long term stable cash flows, given people continue to pay for infrastructure in their day-to-day lives, e.g. toll roads, airports and utilities

  • Upfront capital - investment is high for large infrastructure projects and generally the cash flows from investment are realised for long periods into the future

  • High barriers to entry, reducing competition

Infrastructure assets have the ability to produce stable income with low volatility and should therefore be a staple in investor portfolios. With the global uncertainty experienced so far during 2019, investors may look to infrastructure as a source of stable capital and yield.

ETFS Global Core Infrastructure ETF

CORE offers a low cost way to gain exposure to quality global infrastructure companies which have exhibited the least volatility in the last 6 months.

CORE has been resilient during 2019’s market volatility and has returned 19% in the last 12 months with a yield of 4% (31 October 2019). Please see below some further information on CORE, outlining why you should consider this ETF for your infrastructure exposure.

Attractive Income
  • CORE has a 12 month yield of 4.11% to the 31 October 2019

Stable Growth
  • Since CORE’s launch in 2017 it has returned over 13.5% p.a.

  • Since its inception CORE has delivered risk adjusted returns (refer to sharpe ratio table) above both the S&P Global Infrastructure Index and the MSCI World Index

Low Volatility
  • CORE selects the 75 least volatile global infrastructure companies and weights them by their inverse volatility

  • You can see the effect of CORE’s low volatility screen in the performance table below

Source: Bloomberg as at 31 October 2019. Returns in AUD. Past performance is not an indication of future performance.

Global Diversification
  • Due to CORE’s rules based approach it does not have a significant concentration in any single company and instead offers a diversified infrastructure exposure

  • As at 31st October 2019 the top 10 stocks in CORE accounted for just 18.80% of the portfolio

  • The US and Canada make up the largest portion of CORE’s portfolio, followed by Asia and Europe.

  • Australia has a very small exposure in the index, with QUBE Holdings as the only Australian stock currently in the portfolio

Source: Bloomberg as at 31 October 2019. Returns in AUD. Past performance is not an indication of future performance.