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The Significance of Infrastructure in Australian Investment Portfolios

Author/s: Hsu Wen Peng, Graeme Newell

Date Published: 1/01/2007

Published in: Volume 13 - 2007 Issue 4 (pages 423 - 450)

Abstract

Infrastructure has taken on increased investment importance in recent years with the growth in listed and unlisted infrastructure funds, and increased interest in infrastructure as an asset class by superannuation funds. In addition to the traditional listed infrastructure companies, a number of major institutional investors in Australia have become increasingly involved in infrastructure funds; this includes Macquarie, AMP, Babcock and Brown, Hastings and James Fielding. The purpose of this paper is to assess the significance of these infrastructure funds in Australia; particularly highlighting the leading infrastructure funds, types of infrastructure investment and superannuation fund investment in infrastructure. The investment characteristics and performance of infrastructure over 1995-2006 will also be assessed, as well as the potential role of infrastructure in portfolios. Strong performance has been shown by the infrastructure sectors, as well as providing diversification benefits in a portfolio; with infrastructure volatility having reduced in more recent years as the sector has matured.

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Keywords

Infrastructure - Investment Characteristics - Listed Infrastructure - Performance Analysis - Unlisted Infrastructure

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