Best Listed Real Assets Funds

Well-chosen infrastructure can provide patient investors with solid returns

Infrastructure investments have taken a big hit during the pandemic. But they are set to be one of the key areas to pull the economy out of the recession.

The federal budget increased infrastructure spending by $10 billion, to $110 billion, over the next 10 years with a Covid-19 infrastructure package. This will have been music to the ears of listed real assets funds.

The Magellan Infrastructure Fund (Unhedged) has improved on last year’s second place to top the table this year.

“Whoever [would have] thought that many airports and toll roads would be empty of traffic,” says Gerald Stack, head of investments and head of infrastructure at Magellan. “As our investment universe comprises regulated utilities and infrastructure companies such as toll roads and airports, it’s proven a challenging year return-wise.”

However, he says the fund is well positioned to ride out the turbulence. “Notwithstanding our expectations for greater volatility in the short to medium term driven by the Covid-19 crisis, we are confident that the underlying businesses that we have included in our defined universe and in our investment strategy will prove resilient over the longer term.”

Magellan expects the strategy to provide investors with real returns of about 5% over inflation over the longer term. “We believe that infrastructure assets, with requisite earnings reliability and a linkage of earnings to inflation, offer attractive, long-term investment propositions,” says Stack.