Investment Guidelines & Permitted Investments
To provide an attractive level of total return over time, consisting of dividend income and capital appreciation, and diversification for investors consistent with prudent investment management.
Blended benchmark of 90% of the FTSE Global Core Infrastructure 50/50 Index (net total return AUD) and 10% of the BofA Merrill Lynch Fixed Rate Preferred Securities Index (P0P1) (AUD).
Number of securities
The Portfolio is to be typically invested in 50 - 100 securities at any given time.
Maximum individual security limits
Maximum of 10% of the Portfolio.
Global listed infrastructure securities limits
80% - 100% of the Portfolio.
Global infrastructure fixed income securities limits
0% - 20% of the Portfolio.
0% - 5% of the Portfolio.
The Company expects that the Portfolio will be unhedged. Currency exposures may be hedged defensively where the Company’s Board sees significant risk of currency weakness, but no attempt is made to add value to the Portfolio by actively managing currency risk.
Permitted derivative instruments such as options and futures contracts may be used by the Portfolio Manager, including opportunistic sale of call options on up to 20% of the Portfolio and put options on up to 10% of the Portfolio.
The Portfolio Manager may take up to 30 days to fully invest the Portfolio within the investment guidelines outlined in this Table.
The Portfolio Manager expects to progressively invest the Portfolio within this time frame, having regard primarily to market conditions; however, given the significant size of the infrastructure investment universe, the Portfolio Manager expects rapid deployment of capital.
The Portfolio Manager has the right to exercise or not exercise any proxy voting rights attached to securities or units held within the Portfolio.
Under the Portfolio Management Agreement, the Portfolio Manager may undertake investments on behalf of the Company without the prior approval of the Manager or the Company. In the event that a proposed investment is not in accord with the Company’s investment objective, investment strategy and guidelines outlined above, the Portfolio Manager must obtain written approval from the Manager to make any such investment.
Investments by the Portfolio Manager shall be primarily equity and fixed-income securities of infrastructure companies worldwide. For the purposes of the Portfolio, an infrastructure company is one that derives at least 70% of its revenues from, or has at least 70% of its assets committed to, the construction, development or financing of infrastructure assets, or the management, ownership and/or operation of infrastructure assets such as pipelines, toll roads, airports, railroads or ports.
These companies’ businesses may include:
- the generation, transmission, sale or distribution of electric energy;
- production, transmission or distribution of natural resources used to produce energy;
- distribution, purification and treatment of water;
- provision of communications services, including cable television, satellites, towers, microwave, radio, telephone and other communications media; or
- the provision of transportation services, including shipping or transport logistics.
- Eligible Global Listed Infrastructure Securities: including common stock, limited partnerships units, shares of limited liability companies, hybrid securities such as share warrants, rights to subscribe for or purchase such securities, warrants and American Depository Receipts, Global Depository Receipts, European Depository Receipts and Exchange Traded Funds. Global Listed Infrastructure Securities will be listed securities on global securities exchanges; and
- Eligible Global Infrastructure Fixed-Income Securities: including corporate debt obligations, fixed, fixed-to-float, and floating rate preferred shares or stock and hybrid preferred securities, convertible debt and convertible preferred stock. Global Infrastructure Fixed-Income Securities may be listed on global securities exchanges or unlisted (traded over-the-counter).
The specific types of securities included in the Company’s investable universe include, but are not limited, to:
The Company may also invest in cash securities and derivatives (both exchange traded and over-the-counter) (in the range of 0% up to a maximum of 5%).