We have moved the M&G Global Listed Infrastructure fund to The Adviser Centre’s Recommended list. The fund previously featured on our Positive Watch list.

Fund snapshot

A specialist global equity fund with a sole focus on investing in companies with high quality infrastructure assets, with a view to delivering sustainable income and capital growth over the long term. The approach is stock specific, focusing on a company's capital discipline and long-term growth potential. Within its sector, the fund features in our 'Sector-Specific Equity' category.

Fund description - key points

• This Recommended fund is managed by Alex Araujo, who is passionate about infrastructure investing. A member of M&G’s Income team, he has developed a thoughtful approach that is aligned to the team’s dividend growth philosophy.
• The fund is managed for total return, with the manager seeking to grow investors’ capital and to deliver an income stream that increases every year. With this in mind, the portfolio is diversified across different segments of this specialist investment arena.
• Eligible candidates for investment must own or control critical infrastructure, long-life concessions or perpetual royalties, on the view that physical assets create a strategic barrier to entry. ESG considerations are integrated into the investment process to ensure that the fund’s holdings do not lose their social license to operate.
• The fund is relatively concentrated, typically comprising 40-50 holdings, but portfolio construction guidelines ensure that it is diversified across industries, geographies and infrastructure classes.

Characteristics and utility

• The fund is differentiated compared to peers by dint of the manager’s definition of infrastructure; he invests beyond the realms of traditional infrastructure (utilities, energy and transport) such that the portfolio also incorporates social infrastructure (health, education and security) and evolving infrastructure (communication, transactional and royalty).  This results in a more overt growth profile compared to peers.
• As an asset class, global listed infrastructure typically outperforms in negative markets but does not fully participate in rising markets.  Given this fund’s differentiated approach, we would expect its correlation to equity market direction to be higher than that of direct peers.
• The manager aims to deliver an income stream that increases every year (in sterling terms), however he does not over-reach for yield and the fund pays out its ‘natural’ rate of income.  The fund’s yield could vary according to prevailing conditions and portfolio composition.
• Given the fund’s specialist nature, it can be deployed as a more defensive equity allocation and/or a source of income within a portfolio.

To view our full factsheet, please visit the fund page.