HEAD-TO-HEAD: First State vs Partners Group

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Infrastructure funds have proliferated over the last decade as investors are looking for new asset classes to diversify risks and sources of growth. Investments in infrastructure companies, such as owners and operators of seaports, toll roads, oil pipelines or wireless telecommunication towers, promise steady revenues, especially in markets where these companies enjoy a monopolistic position. Such monopolies tend to be tightly regulated, but the regulation often includes clauses linking the revenue stream to inflation, providing an inflation hedge for investors.

Globally-diversified infrastructure funds can also tap into a variety of growth drivers, such as the need to build new infrastructure in emerging markets or to rebuild in developed economies.

Listed infrastructure funds invest predominantly in publicly-traded equity of owners and operators of infrastructure. They provide daily valuation and liquidity, unlike direct or private equity infrastructure funds, which often have lengthy lock-up periods.

While there’s a debate whether listed infrastructure funds are able to provide the same benefits of diversification, risk-adjusted returns and downside protection as direct infrastructure funds, investors have been receptive to the sector’s promise. The number of listed infrastructure funds and ETFs grew more than tenfold in the past ten years, to almost 100 from only nine in 2006.

FSA compares two listed infrastructure funds registered for sale in Hong Kong or Singapore: the First State Global Listed Infrastructure Fund and the Partners Group Listed Investments Sicav – Listed Infrastructure Fund.

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