The investment manager’s senior portfolio manager, Shane Hurst, said while the risks of an imminent global recession had diminished as the US yield curve moved away from an inversion path, taking a defensive eye to investments was still worthwhile as economic conditions remained weak.
“We continue to believe that defensive strategies are a prudent course for investors and that listed infrastructure presents opportunities for investors looking to preserve and grow capital at the same time as looking for downside protection,” Mr Hurst said.
“Uncertainty has become more pronounced in recent times as the global economy has slowed. Global manufacturing weakness, low inflation, low economic growth and geopolitical tension has the world on edge.”
However, Mr Hurst said the global sharemarket still presented value for investors, given the strong fundamentals of the US economy in particular.
“While there is plenty to worry about, global equities are an engaging proposition as it is unlikely that the US economy, with record low unemployment, will dip into recession any time soon,” he said.
“Central banks are once again providing monetary stimulus, and fiscal stimulus is starting to come through. Retreating to cash or bonds runs the risk of missing out on potentially meaningful returns over the next year.”
Mr Hurst said global listed infrastructure provided a middle ground for investors looking to remain invested in equities while navigating volatility, as evidenced by the fact that Rare Infrastructure’s two funds had improved their performance in October.
“A maturing business cycle means that quality assets that deliver growing earnings will be sought after and attract more capital as investors become more defensively positioned,” he said.
“Listed infrastructure provides downside mitigation while participating in the upside. This downside mitigation can, over the long term, translate into a strategy that provides superior risk.”
