The M&G Global Listed Infrastructure Fund, due for launch on 5 October, will be a sterling denominated Oeic in the IA Global sector with an annual management charge of 0.75%.
Alex Araujo, currently deputy manager on the M&G Global Dividend Fund managed by Stuart Rhodes, has been appointed as lead manager.
The portfolio will comprise 40-50 stocks from a universe of 276 companies across the globe diversified by sector and region and targeting companies from three infrastructure sub-categories: economic (65-75%), social (10-20%) and evolving (15-25%).
The fund also has an ESG overlay in order to mitigate climate risk and protect capital. This involves the examination of business sustainability and a framework to assess long-term financial impact and excludes companies that rely on coal and nuclear power.
It will invest in companies that own or control physical infrastructure such as airport and toll road owner, Ferrovial, and data centre provider, Equinix. Firms it avoids include ‘infrastructure support firms’ such as cement, construction or engineering services business.
Araujo said the fund has a yield of 3.25% which is not shooting the lights out but in line with the fund’s philosophy to focus on long-term growth rather than yield.
“We could go out and find a 5-6% yield portfolio in listed infrastructure, but what we are looking for is growth,” he said. “You get the benefit in your capital return of growing the dividend yield over time.”
Araujo added active management in the asset class is necessary to avoid “flawed” indices that have a disproportionate exposure to certain sectors, particularly utilities.
He said: “With indices you tend to get highly interest rate-sensitive bond proxy-type behaviour. If it is not utilities, it is energy, telecom or transport that you are disproportionately exposed to. We decided early on in the process this was not appropriate to us.”
