Taking private markets approach to infrastructure assets

Applying a private markets approach to assess infrastructure assets and strong focus on risk and return has helped ClearBridge RARE Infrastructure Income fund to win the 2022 Financial Newswire-SQM Research Fund Manager of the Year Equity Global Infrastructure – Currency Hedged award.

“The ClearBridge Global Infrastructure Investment team has a 15-year track record of successfully managing infrastructure strategies and is one of the largest specialist team of listed infrastructure investors globally. Key to our philosophy is to take a long-dated private markets approach to assessing infrastructure assets and execute our views in listed markets,” managing director and portfolio manager, Charles Hamieh, said.

“There are four critical areas differentiate our process from our peers and have enabled repeatable results for our investors.

“A: our proprietary investment universe identifies core infrastructure companies and opportunities not well researched by sell side or buy side managers

B: our fundamental analysis assesses both the return profile and risk, which allows us to build risk adjusted portfolios for investors

C: the integration of ESG into both the cash flow analysis and hurdle rate allows us to quantify ESG related risk but most importantly ESG related opportunities

D: our benchmark unaware portfolio construction allows the freedom to capitalise on each of these investment process advantages and manage through different cycles, again resulting in a superior risk and return outcome for our investors.”

Hamieh also stressed that the outcome of this was a better risk and return, especially when markets were stressed.

Historically, over 50% of the fund’s total return has come from companies not in the widely used indices, which pointed to another sustainable source of alpha relative to the index and the fund’s peer group.

“We have our own universe and [which goes] back to the inception of our strategies when there was no really good benchmark, so we have built our own universe […] and it’s a very different universe to many of our peers,” he added.

ClearBridge’s proprietary investment universe for the ClearBridge RARE Infrastructure Income Fund is the income universe which includes the most liquid, highest quality, highest concentration infrastructure companies globally that generate a sufficient level and quality of dividend yield.