Investors wanting to allocate a portion of an investment portfolio to listed infrastructure should look to overseas companies, as their structures are simpler and less debt is employed on their balance sheets, according to the investment director of a local fund manager.
"Domestic companies are pretty highly structured with all these stapled trust structures....you need to think about that because it actually has an impact on your returns and we've seen in the last six months it has an impact on the way these things trade," RARE Infrastructure investment director Nick Langley said.
In particular Langley warned the more structure in place, usually around gearing, the more the investment will trade and behave like a financial stock.
Local listed infrastructure companies may also employ high levels of debt, increasing the level of risk associated. Conversely global infrastructure companies do not gear as much.
However he did admit investors had to be wary of the quality of management running global organisations.
"In the US they've been listed for a long time and the management is excellent....in Europe it kind of depends on where the company comes from. Some of the utilities are a little bit sleepy and not always that focused on listed shareholders because they've got large cornerstone government shareholders," Langley said.
