Investment Professionals

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

Period Total Return (p.a.)

3M

6M

1Y

2Y

from 19 Sep 17

ETFS Global Core Infrastructure ETF (AUD, NAV, TR)

3.16%

8.19%

18.89%

11.70%

13.66%

S&P Global Infrastructure Index (AUD, TR)

4.03%

8.75%

24.39%

11.61%

12.69%

MSCI World Index (AUD, TR)

2.48%

6.00%

15.70%

12.61%

15.40%

Annualised Volatility

3M

6M

1Y

2Y

from 19 Sep 17

ETFS Global Core Infrastructure ETF (AUD, NAV, TR)

6.95%

6.97%

7.38%

8.04%

8.04%

S&P Global Infrastructure Index (AUD, TR)

8.57%

8.37%

8.70%

8.95%

8.84%

MSCI World Index (AUD, TR)

11.26%

10.74%

10.86%

10.67%

10.53%

Sharpe Ratio

3M

6M

1Y

2Y

from 19 Sep 17

ETFS Global Core Infrastructure ETF (AUD, NAV, TR)

0.31

1.00

2.35

1.25

1.49

S&P Global Infrastructure Index (AU, TR)

0.35

0.90

2.63

1.11

1.24

MSCI World Index (AUD, TR)

0.13

0.45

1.30

1.02

1.30

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

47a09ef2b62d6d3881d1223684ffa87a.PNG

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