The Infrastructure Securities strategy run by QUAERO CAPITAL portfolio manager Mark Ebert has changed its benchmark. In March, the portfolio manager re-positioned the Real Assets portfolio to focus exclusively on infrastructure securities, the sector which had always been the driver of the Real Assets portfolio. The name was changed, and now infrastructure securities comprises 98.5% of the strategy, with the balance in cash.
“We intend to maintain this infrastructure focus for the foreseeable future,” Ebert noted. “Since infrastructure equity portfolios have a high correlation to inflation, we consider G7 inflation+5% to be a more relevant and appropriate benchmark”. The largest portfolio allocations remain the Toll Road & Tunnel, Diversified Infrastructure, Social Infrastructure, Wireless Communication and Railroad sub-sectors.
The strategy provides a liquid alternative to what has traditionally been the domain of private equity. All stock positions can be liquidated in one day. In accordance with the manager’s hedging policy, all major currency exposure is hedged for all classes, meaning some 84% of the portfolio is hedged.
Diversification is ensured by investing in a wide range of Infrastructure sub sectors. There are 35 stocks in the portfolio; the largest accounts for 3.7%.
Some of the portfolio’s biggest movers in September included Societa Iniziativa Autostradali e Servizi , which rose 7.6% after climbing 8% during August. It is the second largest Italian toll road concessionaire and the fourth largest in the world. It recently announced that five of its subsidiaries have signed additional deeds with the Italian Ministry of Infrastructure and Transport, ending a period of regulatory uncertainty. Macquarie Atlas Roads was down 4.4% after announcing the purchase of a further 4.9% stake in its French toll road business, APRR, which increases its stake to 25.0%. This is an accretive transaction funded by debt and a new equity issue at a 5% discount to the theoretical ex-rights price.
John Laing Group was down 4%. It announced 1H results with a 1.2% increase in NAV / share, and a 48% reduction in operating income. The company is expected to benefit from its very pro-active portfolio management. Laing invests in low-risk markets in N. America, Europe and Australasia, and we project 12% compound NAV growth over the next three years with the dividend rising 30% over the period.
The railroad sector was up 6.5% last month. The strategy is very overweight this sector and all of the six railroad stocks were up. Kansas City Southern advanced 5%, Canadian Pacific increased 8%, Norfolk Southern rose 10%, and Union Pacific climbed 11%.
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Notes to Editors
About QUAERO CAPITAL
QUAERO CAPITAL is an independent, specialist asset manager which brings together independently minded investment managers who use original research to provide highly actively managed strategies for clients in the institutional and wholesale markets. QUAERO CAPITAL was founded in 2005 in Geneva, it is 100% employee-owned with its founding partners taking an active role in its investment processes. QUAERO CAPITAL is a team of 44 individuals including 24 experienced investors who enjoy working in an investment focused environment. It offers a range of high conviction investment strategies spread across 13 Luxembourg UCITS funds, one Luxembourg SIF, two Swiss regulated funds and one French regulated fund. If you would like more information, please go to www.quaerocapital.com
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