The fund has two aims:
- to provide a combination of capital growth and income to deliver a return that is higher than that of the global equities market over any five-year period;
- to increase the income stream every year in US dollar terms.
Investment policy and strategy
Core investment: At least 80% of the fund is invested in shares issued by infrastructure companies, investment trusts and real estate investment trusts of any size, that are domiciled in any country, including emerging markets*. The fund usually holds shares in fewer than 50 companies. The minimum 80% allocation may include ordinary shares, preference shares and convertibles. Infrastructure companies include businesses in the following sectors: utilities, energy, transport, health, education, security, communications and transactions. Companies that derive more than 30% of their revenue from coal-fired and nuclear power are excluded from the investment universe, as are industries such as tobacco, alcohol, adult entertainment, gambling and weapons. United Nations Global Compact principles on human rights, labour, environment and anti-corruption are also considered in the analysis of companies.
Other investment: The fund may also invest in other funds, cash and assets that can be turned quickly into cash.
Use of derivatives: Derivatives may also be used to manage risks, reduce costs and to manage the impact of changes in currency exchange rates on the fund’s investments.
* Emerging market countries are defined as those included within the MSCI Emerging Markets Index and/or those included in the World Bank’s definition of developing economies, as updated from time to time.
Strategy in brief: The fund’s stock selection is driven by in-depth analysis of individual infrastructure companies. The investment manager seeks to invest in businesses with excellent capital discipline and the potential for long-term dividend growth. Stocks with different drivers of dividend growth are selected to construct a portfolio that has the potential to cope in a variety of market conditions. The fund is expected to exhibit lower fluctuations in returns and offer a higher dividend yield than the global stockmarket, which is consistent with the characteristics of infrastructure securities. Sustainability considerations encompassing environmental, social and governance (ESG) issues are fully integrated into the investment process.
Performance comparator: The fund is actively managed. The MSCI ACWI Net Return Index is a point of reference against which the performance of the fund may be measured. It is a net return index which includes dividends after the deduction of withholding taxes.
Convertibles: Bonds issued by companies that usually pay a set rate of interest and which can be exchanged for predetermined amounts of company shares.
Derivatives: Financial contracts whose value is derived from other assets.
Dividend yield: Annual income distributed as a percentage of the share price. Preference shares: Loans to a company that may be traded in the same way as an ordinary share, but generally have a higher yield and pay dividends on fixed dates.
Risks associated with the fund
The value of investments and the income from them will rise and fall. This will cause
the fund price, as well as any income paid by the fund, to fall as well as rise. There
is no guarantee the fund will achieve its objective, and you may not get back the
amount you originally invested.
Changes in currency exchange rates will affect the value of your investment.
The fund holds a relatively small number of investments and, as a result, may
experience larger price rises and falls than a fund which holds a larger number of
The fund will invest in emerging markets which are generally more sensitive to
economic and political factors, and where investments are less easily bought and
sold.In exceptional circumstances,the fund may encounter difficultieswhen selling
or collecting income from these investments,which could cause the fund to incur a
loss.In extreme circumstances, it could lead to the temporary suspension of dealing
in shares in the fund.
Convertibles are subject to the risks associated with both bonds and company
shares, and to risks specific to the asset class. Their value may change significantly
depending on economic and interest rate conditions, the creditworthiness of the
issuer, the performance of the underlying company shares and general financial
market conditions. In addition, issuers of convertibles may fail to meet payment
obligations and their credit ratings may be downgraded. Convertibles may also be
less liquid than the underlying company shares.
Where market conditions make it hard to sell the fund’s investments at a fair price
to meet customers’ sale requests,we may temporarily suspend dealing in the fund’s
Some transactions the fund makes, such as placing cash on deposit, require the
use of other financial institutions (for example, banks). If one of these institutions
defaults on their obligations or becomes insolvent, the fund may incur a loss.
The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash.