Fund in Focus: AMP Core Infrastructure fundby Chris Limberg on Dec 31, 2016
The AMP Core Infrastructure fund has been a recent addition to the Limberg Asset Management investment models in July 2016. The Infrastructure fund has been included to provide the models with a different asset class that is diversified from traditional equities and bonds. Infrastructure assets traditionally have defensive characteristics as they invest in large projects such as transport, energy, water and community projects which are essential to positive growth within our society. Many of these infrastructure projects create employment and provide essential services. With the world population growing the investment into infrastructure projects is essential to provide services to people such as water, electricity and transportation.
Fund objective: The fund offers strong risk adjusted return (income and capital) potential and is expected to have a low correlation to other asset classes such as equities and bonds. The goal is to outperform the 10 year Australian Govt Bond yield plus 3.25%. The fund has exceeded greater than these returns since its inception in 2007.
Fund strategy: is to invest in listed and unlisted infrastructure assets which provide essential services, have monopolistic characteristics, low operating risk and volatility and predictable long duration cash flows.
The reasons for investing in the AMP Core Infrastructure fund:
- Provides access to direct infrastructure assets that are usually only accessible to very large institutional investors.
- typically provides a higher and more consistent level of income with lower volatility
- provide diversification within the Limberg Asset Management investment models with exposure to multiple asset types including airports, water, gas, electricity and transport infrastructure
- is expected to have a low correlation to shares and bonds
- invests in listed infrastructure securities which provide liquidity and further diversification
- provide global diversification by investing in listed and unlisted infrastructure assets around the world. With approximately 30% exposure to Australia and 70% across the US, Europe, Asia and other regions.
Unlisted Infrastructure assets
A few examples of the major unlisted assets that are held within the AMP Core Infrastructure fund include:
- Australian Pacific Airports Corporation
APAC owns 100% of Melbourne Tullamarine airport and 90% of Launceston airports under 50 year leases from the Federal Government, with an option for another 49 years
- SA Schools
SA Schools Public Private Partnership comprises six new super school facilities in the greater Adelaide region is South Australia with an operational capacity of over 4,600 pre-school, primary, secondary and child care places
As at 30 November 2016