Speaker 0:
in uncertain markets. I think that that one of the main benefits of infrastructure is that the the assets you're investing in real assets, um, real assets with long term, stable, visible returns. These can be based on regulation regulated assets such as utilities.

Speaker 0:
Um, where you've got clarity on the return that you're going to get long term contracted assets such as renewable generation,

Speaker 0:
um, telecom towers pipelines Where again, you know, you've got certainty over the returns, the company's revenues and in many cases, their their earnings, their cash flows, their dividends, Um, over a long period of time. So, you know, in a in a tricky market, I think being able to hang your hat on these this this long term visibility is is incredibly important,

Speaker 0:
uh, listed infrastructure. Obviously, there's a number of ways you can invest in infrastructure as an asset class. What listed infrastructure gives you, I think, is is liquidity. And again, that's incredibly important. Um, in fast moving markets, when clients, you know want to put money in quickly and and maybe, you know, want to redeem money. Um, we've seen in other real asset classes, uh, problems with with illiquidity funds being gated, et cetera.

Speaker 0:
Um, listed infrastructure. You know, I I invest in, you know, primarily large cap stocks. Great deal of liquidity. So again, I think, you know, in in in markets such as we're seeing at the moment, that's that's really important.

Speaker 0:
The the outlook for this infrastructure is is, I think, very positive. I think that we're at a point now in the interest rate cycle where rate rises, you know, we we're sort of coming to the end of the rate rise cycle. I think in the US from the Fed in the UK Bank of England, you know, there are There are clear signals now

Speaker 0:
that the rate rises are tapering off. And indeed, if you listen to some economists, we may see interest rate cuts within the next 12 months. So higher rates infrastructure stocks. They tend to be owned for income.

Speaker 0:
Uh, they tend to have a reasonably high level of debt, and that's fine because they've got, um, visible, regulated, long term contracted earnings. So, you know, you always know you're gonna be able to pay the interest on that debt, which is important, and a lot of the time the higher interest costs are passed through. But nonetheless, you know, the fact that, um, the stocks run, you know, run a high level of debt? They they are often seen as bond proxies, and therefore they don't tend to perform

Speaker 0:
particularly well as interest rates are rising. So I think as we're seeing the the rate rise cycles come to an end. You know, this is a very good time to to look at the sector, either for for new investors or for existing investors looking to allocate um into into areas that could do Well, um, I think the other point is that, you know, we've spoken a lot in the past about the energy transition. This is still a very, very live theme.

Speaker 0:
And you know, the electrification of economies basically of of of vehicle light vehicles, heavy vehicles, home heating through heat pumps, et cetera. You know these are all real long term trends and listed infrastructure benefits. You know

Speaker 0:
enormously from this trend, both investing in the distribution grids, the transmission grids and, of course, the renewable generation assets that sit behind and create that clean energy that clearly is vital to drive the decarbonisation agenda.

Speaker 0:
We don't tend to change the portfolio an awful lot. We we may buy and sell 678 stocks a year. We've got 48 stocks at the moment. We we tend to be long term buy and hold investors. But 11 area we have, um we have looked at recently is Canadian railroads and and these are railroads listed in Canada, but they're actually, you know, very large networks right across North America.

Speaker 0:
The two stocks we've bought are C N r Canadian national and, uh, Canadian Pacific Kansas City, which is, um, uh, Canadian Pacific bought, uh, another smaller US railroad called, um, Kansas City Southern. Uh, they they this transaction went through maybe 12 months ago, but it's just been signed off by the the regulators. This is an incredible stock, um, an incredible company,

Speaker 0:
because it's the first company with an owned rail network that spans right through from the east and west coast of Canada, through down the spine of the United States and actually into Mexico and right through Mexico as well. Now one of the main, um, economic trends, I think in the United States over the next 5 10 years will be insourcing or near sourcing. So bringing

Speaker 0:
production of, you know, manufacturing heavy industry, et cetera. Um, you know, bringing it in domestically now for for these purposes, that domestic includes Mexico, where, you know, we've seen an awful lot of US automakers, for example, set up production clearly, very low cost production, relatively low cost production in Mexico. So having a rail network that can actually,

Speaker 0:
um, that that you own and you get all the synergies and all the benefits of, you know, literally owning the network rather than having to go through third parties and offering that to these companies as a as a shipment solution. Um, we think that you know, that that's just an incredible competitive advantage and and, you know, very much fits into the sort of long term economic trends that we're seeing.

Speaker 0:
So these, uh, these two Canadian railroads, I think will will be great long term holdings for the fund.

Speaker 0:
The outlook for the fund's income is is really positive. We o over the long term, we aim to achieve, um, dividend growth That clearly was, uh was very difficult through the pandemic period. And you know, I I think we're We're quite proud of the fact

Speaker 0:
that year on year we only lost, um, just over 8% of the fund's dividends in a period where a lot of companies were were, you know, cutting dividends, not paying dividends at all because of the very, very uncertain, um, macroeconomic societal situation. The interesting thing is that, um, for this year's dividend payout, we have a couple of stocks that haven't paid dividends since the pandemic.

Speaker 0:
Um, National Express and AINA, which is our Spanish airport operator. You know, very clearly these are these are stocks involved in companies involved in the movement of people. So you know that that obviously has has rebuilt over time. Those dividends are coming back. We've got our channel tunnel owner get link has seen a very, very significant increase in its dividend.

Speaker 0:
And so on, aggregate. I think the the picture for the the fund year end is may So, um, as we end, um, at the end of May 2023 I think the dividend that we're going to be able to declare for the fourth quarter will, um, will will drive some quite significant year on year growth. And, um

Speaker 0:
I think that's that's important both to our clients who take the income but also to our clients who see that reinvested, Um, as we as we go forward,

Speaker 0:
the the funds differentiated from its peers in a number of ways. Um, some of the funds peers invest in, uh, investment trusts UK investment trusts focused on infrastructure on renewable energy, et cetera. We don't have any investments in investment trusts at all. We're a pure play. Uh, equity fund. We have 48 equities. Um, as of today, uh, so I think that's quite an important differentiator.

Speaker 0:
Um, otherwise, I think you have to look through our sector positioning. We've always had, um, a very significant weighting to to data infrastructure, telecommunications, uh, infrastructure. And I think, um, you know, this is an area where we think we can We can add significant value both by investing in the the pure play stocks of telecom and communication towers, such as in wit and American Tower

Speaker 0:
um, which have done, um, done very, very well over a long period of time for us. Uh, but also investing in telecom operators such as Deutsche Telecom, who own a significant fixed and mobile, high speed networks where we think there's a really interesting valuation opportunity as as as investors realise, the the fundamental value of this this high speed data infrastructure.

Speaker 0:
Um, I guess the other area that I focus on is is US infrastructure and particularly stocks focused on the energy transition. US regulated utilities that are investing huge amounts of money in transmission and distribution of electricity and also,

Speaker 0:
uh, both utilities and and pure play renewable stocks which are investing in in wind and solar generation. These, uh, all of these stocks have been given a really significant boost, um, by the Inflation Reduction Act that was signed in July last year. As the benefits of this act in terms of the subsidies and the tax breaks start to come through. You know, I I definitely feel that's been underestimated by

Speaker 0:
the the wider market to maybe look at utilities as dull, boring, very low growth stocks. You know, these are these stocks are actually going to drive significant growth potentially through the next decade.

Speaker 0:
Um, driven by this, um, this this energy transition agenda. And so, you know, we have a very significant weighting in the fund to those those areas. Um, which which, you know, I I think can drive returns for investors. Um, you know, over the next decade and beyond.