About Infrastructure Funds
Infrastructure funds give an investor exposure to owning part of public assets such as railways, airports and toll roads. These funds can provide both capital growth and an income return, but traditionally they have been mainly used for income.
Global listed infrastructure opens up a world of investment opportunities that have the potential to bring a positive impact to society. According to global management consulting firm McKinsey, $57 trillion needs to be invested in global infrastructure between 2013 and 2030, and it’s unlikely that this can be funded by governments alone.
What Is The AMP Global Infrastructure Fund?
The AMP Capital Global Infrastructure Securities Fund is a partnership between BetaShares and AMP Limited (ASX: AMP), making use of BetaShares’ experience with ETFs and AMP Capital’s experience with active management.
The GLIN ETF does not invest directly in infrastructure assets, instead investing in 34-45 companies in the infrastructure sector. The ETF looks for companies with strong monopolistic characteristics with little or no competition, a trait that most good investments will have.
The GLIN ETF also has global exposure, with nearly 60% of the fund invested in North America, roughly 20% in Europe (excluding the UK), another 10% in the UK and then smaller exposure to Asia, Australasia and Latin America.
The ETF’s focus on companies with strong competitive advantages and little competition seems to pay off, with a return after fees over the last three years of 13.02% per year. The last 12 months have been particularly strong, with the GLIN ETF returning 27.09%.
The actively-managed fund has outperformed its benchmark, the Dow Jones Brookfield Global Infrastructure Net Accumulation Index AUD, over the last three years by 0.63% per year.
As is typical for an infrastructure fund, the GLIN ETF also offers attractive dividends. These are paid quarterly and, as of the most recent distribution, the annual dividend yield is 4.75%.
Fees And Risks
The GLIN ETF charges a management fee of 0.85% per year. Although this may seem on the high side, keep in mind it is an actively-managed fund with a global focus.
Despite the fund being diversified globally, a portfolio of 34-45 holdings is quite low and they are of course concentrated in one sector, which reduces a lot of the diversification benefit. This fund may not be suitable as the core part of a portfolio, but it could be used as a smaller, tactical holding in a portfolio with more general ETFs.
The Rask Finance video below explains diversification:
The GLIN ETF is also unhedged, meaning it is exposed to exchange rate or currency risks. This is particularly important for an ETF such as this one because it has holdings all around the world, so exchange rates become very important.
In today’s low rate environment, you may need to try something different to generate a stable passive income. The AMP Global Infrastructure Fund could be one option and it has historically provided both capital growth and dividends. As always though, past performance is not a reliable indicator of future performance.
For now, I’ll be sticking with our number one ETF pick in the free report below.
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Disclosure: At the time of writing, Max does not have a financial interest in any of the companies mentioned.