Why we are excited about the opportunities in Listed Real Assets

LiveWire10-17

Infrastructure, REITs, and Utilities faced challenges during Covid-19, and in 2023 due to the market’s focus on rising interest rates, which overshadowed the long-standing pricing power of listed Real...

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However, the tail end of 2024 has brought a shift.The headwinds of recent years are now turning into tailwinds for the sector. Inflation pass-through mechanisms, which can take months to years to manifest, are now positively impacting rents, tolls, and utility bills. Additionally, the adverse effects of higher interest rates are reversing in many regions.During the sharp global equity market sell-offs in early August and early September, our Australia-focused Martin Currie Real Income Fund strategy  and the Martin Currie Global Real Income Fund strategy  have demonstrated significant resilience performance since the June quarter end compared to more volatile broader equity market indices.We believe this resilience can be attributed to a key feature of our investment process – a fo","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"SCG.AU":"SCENTRE GROUP","UK":"优客工场","AIA.AU":"AUCKLAND INTL AIRPORT LTD","BK7015":"非传统电信运营商","BK7140":"铁路","BK7136":"复合型公用事业","BK4205":"房地产经营公司","AZJ.AU":"AURIZON HOLDINGS LTD","BK7090":"公路与铁路","BK7148":"燃气公用事业","BK4233":"房地产运营公司","XAO.AU":"标普/澳交所 普通股指数","BK7102":"机场服务","BK7162":"零售房地产信托","XJO.AU":"标普/澳交所 200指数","BK7005":"零售业房地产投资信托","XKO.AU":"标普/澳交所 300指数","BK4528":"SaaS概念","BK7510":"REITs概念","TCL.AU":"TRANSURBAN GROUP","APA.AU":"APA GROUP","AGL.AU":"AGL ENERGY LTD","CNU.AU":"CHORUS LTD"},"translate_title":"为什么我们对上市实物资产的机会感到兴奋","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AIA.AU":1,"APA.AU":1,"AZJ.AU":1,"AGL.AU":1,"UK":1,"TCL.AU":1,"SCG.AU":1,"CNU.AU":1,"XKO.AU":0.62,"XJO.AU":0.62,"XAO.AU":0.62},"content_text":"Infrastructure, REITs, and Utilities faced challenges during Covid-19, and in 2023 due to the market’s focus on rising interest rates, which overshadowed the long-standing pricing power of listed Real Assets. However, the tail end of 2024 has brought a shift. \nThe headwinds of recent years are now turning into tailwinds for the sector. Inflation pass-through mechanisms, which can take months to years to manifest, are now positively impacting rents, tolls, and utility bills. Additionally, the adverse effects of higher interest rates are reversing in many regions.\nResilience in volatile markets\nDuring the sharp global equity market sell-offs in early August and early September, our Australia-focused Martin Currie Real Income Fund strategy (80% ASX-listed, 20% developed market offshore) and the Martin Currie Global Real Income Fund strategy (18% ASX-listed, 82% offshore) have demonstrated significant resilience performance since the June quarter end compared to more volatile broader equity market indices.\nWe believe this resilience can be attributed to a key feature of our investment process – a focus on investing in ‘essential building blocks of society’. \nThe resilience, albeit short-term so far, signals to us a return to rationality in the market’s view of listed Real Assets as a diversifying anchor. The Real Assets we target typically exhibit lower economic sensitivity. Our unique process seeks high-quality listed Real Assets with an essential-use nature, dominant assets with pricing power, and recurring cash flows that grow with inflation and urban population growth. \nWe are particularly looking for Real Assets operating in cities and regions experiencing strong demographic growth, avoiding areas or countries with declining populations and, thus, declining demand.\nLong-Term Growth Drivers\nIn addition to the urban population growth thematic, which is applicable to all our holdings, we see the long-term returns of listed Real Assets also driven by key megatrends, including:\n\nEnergy Generation and Transmission Demand: Driven by increasing electrification; and \nExponential Data Storage and Network Needs: Super-charged by growing AI demand.\n\nKey stocks we hold across both portfolios that are aligned with these trends include:\n\n\nDigital Realty (NASDAQ: DLR): A global leader in Data Centre ownership and operation, benefiting from the tailwinds of rising data usage, with high returns on incremental capital flowing into attractive dividends \n\nAGL Energy (ASX: AGL), Emera and TC Energy (Canada) and National Grid (UK): Leading utilities supporting electrification for the energy transition, and energy demand growth from data centre and AI demand\n\nAPA Group (ASX: APA): Gas transmission and distribution business with energy transition and peaking fuel role, and a growing presence in contracted clean energy solution such as solar, wind and electricity transmission.\n\nWe also see significant potential in assets poised to benefit from inflation and population growth, such as toll road operator Transurban (ASX: TCL), rail freight operator Aurizon (ASX: AZJ), and retail landlord Scentre Group (ASX: SCG). New Zealand’s high-speed broadband provider Chorus (ASX: CNU) services New Zealand’s growing population and its regulated asset base and revenues also directly reference inflation. Recently, both strategies also initiated an investment in Auckland Airport (ASX: AIA), set to benefit from New Zealand population growth and the rise of the Asian middle class.\nAn enduring positive outlook\nWe remain very constructive on the outlook for the listed Real Asset sector. Despite recent strong returns, our portfolio holdings are still priced at an attractive discount to our fair value assessment. \nWith interest rates now becoming a tailwind, and positive earnings and dividend revisions flowing in, while broader equities face the opposite, the portfolio’s fundamentals continue to improve. \nThis, combined with the ongoing appeal of Listed Real Assets’ leverage to the megatrends, offers a powerful combination for an attractive yield, income growth and steady returns in an increasingly uncertain world.\nLearn more about Martin Currie Australia and our listed Real Asset strategies below.\n\n\n\nManaged Fund\nMartin Currie Real Income Fund\nAustralian Shares\n\n\nView\n\n\n\n\n\n\nManaged Fund\nMartin Currie Global Real Income Fund\nGlobal Shares\n\n\nView\n\n\n\n\n\n \n\n\nNever miss an update\n\n    Enjoy this wire? 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