Hi Rod, Rodney. Looking at listed core infrastructure from a global perspective, we haven't quite been able to get across the line on any of the Australian infrastructure stocks as yet. Although they typically have good dividend yields, we have concerns about some of the cash flow profiles and valuations. We also take a very conservative approach in how we define 'core' infrastructure. Above $1 bil mkt cap there are only 5 or 6 stocks that could meet our criteria, and above $10 bil only 3. When we compare these to their global utility and transport infrastructure peers, so far we have found lower risk and good value in other developed markets.
Hi Graeme, we define core infrastructure as assets which have stable and resilient cash flows, with a monopoly position which allows the ability to pass on cost inflation. Toll roads, fully regulated energy grids, airports and some tower assets meet this definition. Non-core infrastructure would include things like data centres, power plants selling into unregulated markets, and some social infrastructure such as aged care facilities. Non-core infrastructure will tend to have greater exposure to economic cycles, and therefore can be less defensive and tend to behave more in line with broader stock markets.