Roy Keenan from Yarra Capital Management shares insights with James Dunn from The Inside Network on the role of active management. The Inside Adviser
After the Hayne Royal Commission many advisers decided to steer away from large dealer groups in favour of becoming self-licensed. In the last six months, however, that trend has taken an abrupt turn.
2021 looks bright for global infrastructure
Founder and Senior Portfolio Manager Nick Langley at RARE Infrastructure, now named Clearbridge Investments, has put out a short note outlining the infrastructure sector as one area that remains bright despite the pandemic.
According to Langley “there is a confluence of issues, events and realities that cause us to be extremely positive about the potential returns on offer from listed infrastructure investments globally as the world grapples with the pandemic and gets ready for the Biden administration in the U.S. Four positive themes that make investing in infrastructure attractive in 2021 are: acceleration in infrastructure projects globally, Joe Biden’s stance on green energy, growth in utilities sector and focus on lower emissions target and transport infrastructure.”
Infrastructure projects are being pushed ahead especially in the develop world as Governments lock in opportunities to help support their economy by stimulating jobs and business. Langley says he “expects to see a further focus on infrastructure spending due to the U.S. presidential election outcome and the probability that Democrats will control the agenda in both houses of Congress (House and Senate). Projects related to renewable power generation and electric vehicles in the utilities sector are expected to benefit, and a larger stimulus bill is now also likely. Initiatives to expand broadband to rural areas will likely benefit the wireless-tower sub-sector as will the 5G rollout globally, while ‘midstream’ or traditional energy could face headwinds due to a faster transition toward renewables.”
One sector Langley believes was hardly impacted by pandemic was the utilities sector in the U.S, Europe and Asia due to their essential service nature, supportive regulation, environmental importance in leading the decarbonisation of economies and social importance as major employers.
Langley believes “a variety of trends will likely accelerate asset growth and subsequent earnings, cash flow and dividend growth in the medium and longer-term. These include higher renewable energy targets, gas to electricity switching – in residential as well as commercial, the build-out of electric vehicle charging infrastructure and the need to build grid resilience against increasingly destructive weather events related to climate change.”
Langley also sees “opportunities to invest in transport infrastructure, particularly in long-dated monopoly assets like the Eurotunnel and North American Rail, which are expected to benefit from policies to lower emissions and the post-COVID-19 recalibration of supply chains. It is indeed remarkable that with so many issues facing governments and institutions, particularly the pandemic-induced health and economic crises, that one sector offers so much potential for investors. We believe we have good cause to be very optimistic about the likely returns from global listed infrastructure in 2021,” he said.
