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Listed infrastructure still subject to 'vagaries of market sentiment'
Research house Morningstar has warned that while listed infrastructure as an asset class does possess counter-cyclical risk exposures, investors shouldn't think of infrastructure as 'safe equities'.
Morningstar said while most global listed infrastructure funds held up better in 2008's turbulent market conditions than global property and share funds, "double digit losses will have shaken the faith of those who thought the sector immune to market cycles".
While the individual infrastructure managers assessed by Morningstar declined less than global equities, the infrastructure index still lost more than 35 per cent of its value in 2008. The Morningstar report said these results reinforce the fact that "infrastructure is a risky asset".
The research house said investors would be wise to apportion listed infrastructure investments within their real estate or global equities holdings, rather than treating it as a separate asset class.
In its review of five listed infrastructure strategies, its first for the sector, Morningstar gave two fund managers a 'recommended' rating - RARE and Vanguard.
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The fund has achieved double-digit returns amid market volatility, reinforcing the value of long-term investment strategies for its members.
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