The AMP Capital Global Infrastructure Securities Fund (ASX: GLIN) has plenty of appealing traits, but it doesn’t come without risk. Could it work for your portfolio?
What Are Infrastructure Funds?
Infrastructure funds give an investor exposure to owning part of public assets such as toll roads, railways and airports. These funds can provide both capital growth or an income return, but traditionally they have mainly been used for income.
Exchange-traded funds or ETFs are investment funds that are listed on a stock exchange and provide exposure to a range of shares or assets (such as infrastructure assets) with one purchase.
This Rask Finance video explains ETFs:
AMP Capital Global Infrastructure Fund
The AMP Capital Global Infrastructure Fund is a partnership between BetaShares and AMP Limited (ASX: AMP), making use of AMP Capital’s experience with active management and BetaShares’ experience with ETFs.
GLIN does not invest directly in infrastructure assets but instead invests in 34-45 companies in the infrastructure sector. The GLIN ETF looks for companies with strong monopolistic characteristics with little or no competition, a trait that most good investments will have.
The GLIN ETF also has global exposure, with around 60% of the fund invested in North America, around 20% in Europe (excluding the UK), another 10% in the UK and then smaller exposures to Asia, Australia and Latin America.
This focus on companies with strong competitive advantages and little competition seems to pay off, with a return after fees over the last three years of 13.02% per year. The last 12 months have been particularly strong, with the GLIN ETF returning 27.09%.
The actively-managed fund has outperformed its benchmark, the Dow Jones Brookfield Global Infrastructure Net Accumulation Index AUD, over the last three years by 0.63% per year.
As would be expected for an infrastructure fund, the GLIN ETF also offers attractive dividends. They are paid quarterly and, as of the most recent distribution, the annual dividend yield is 4.75%.
Fees & Risks
The AMP Global Infrastructure Fund charges a management fee of 0.85% per year, which may seem on the high side but keep in mind this an actively-managed fund with a global focus.
While the fund is diversified globally, a portfolio of 34-45 holdings is quite low and they are of course concentrated in one sector, which reduces a lot of the diversification benefit. This fund may not be suited as the core of your portfolio, but it could be used as a smaller, tactical holding in a portfolio with more general ETFs.
The GLIN ETF is also unhedged, meaning it is exposed to exchange rate or currency risks. This is particularly important for an ETF such as this one because it has holdings all around the world, so exchange rates become very important.
My Take On GLIN
In today’s low rate environment, you may need to try something different to generate a stable passive income. The AMP Global Infrastructure Fund could be one option and it has historically provided both capital growth and dividends. As always though, past performance does not guarantee future performance.
For now, I’ll be sticking to our number one ETF pick in the free report below.
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Disclosure: At the time of writing, Max does not have a financial interest in any of the companies mentioned.
