HEAD-TO-HEAD: First State vs Morgan Stanley

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Darius McDermott, Chelsea Financial Services

Introduction

Infrastructure funds invest in a wide range of assets, but typically they all fall into the category of “essential public use”. They include, utilities such as electricity power lines and gas pipelines; transport services such as airports, toll roads, railways and docks; communication facilities such as broadcasting towers — as well as other physical assets that allow modern societies to function.

Typically, infrastructure funds provide predictable returns for investors, largely because large infrastructure projects often face low levels of competition and high barriers to entry.

The rapidly increasing focus on green energy construction, fuelled by new carbon-free technologies in an era of acute climate-change awareness provides further opportunities for infrastructure fund diversification.

At the same time, developing countries are continuing to build out their physical infrastructure as they industrialise and urbanise.

It is, therefore, perhaps surprising that there are so few infrastructure funds available to retail investors in Hong Kong and Singapore — especially when so much of the innovation and construction is taking place in Asia.

Nevertheless, FSA asked Darius McDermott, managing director, Chelsea Financial Services, to compare two out of the eight global infrastructure products available: the First State Global Listed Infrastructure Fund and the Morgan Stanley Global Infrastructure Fund.

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