The asset manager Bantleon has created a new equity fund called Bantleon Select Infrastructure that invests in listed infrastructure companies. With a focus on value stocks, the fund is designed to profit from the superior value growth potential of the basic infrastructure segment. The portfolio managers select stocks using fundamental criteria and also take account of non-financial information such as environmental, social and governance (ESG) factors.
By concentrating on basic infrastructure, they aim to harness global structural trends such as demographic change, urbanisation, scarcity of resources and the digital transformation. They invest first and foremost in transport, utilities and passive telecommunication infrastructure with monopolistic business models, high market entry barriers and stable income. »This, combined with physical assets that are difficult to substitute, makes these companies a good value investment in these times of asset price inflation,« explains Susanne Linhardt, Senior Portfolio Manager Infrastructure. »By investing in listed infrastructure firms, we are offering diversification relative to both the global equity market and direct investments in infrastructure,« she adds.
To profit from the basic infrastructure segment’s superior long-term value growth potential, the portfolio management team combines a fundamental stock-picking approach with detailed sustainability analysis. Individual stocks are selected from a thematic universe of 300, using the following criteria: attractive valuation, above-average long-term growth potential (in terms of share price and dividends) and long-term security as regards the regulatory environment. They then undergo in-depth analysis of their business model, growth prospects, competitive position and market environment as well as sustainability (ESG) factors. The end result is a portfolio of 35 to 50 stocks with a European bias.
According to Bloomberg and Thomson Reuters, Bantleon analysts rank among the best in the world, and their research forms the basis for weighting the various basic infrastructure subsegments and steering interest rate and inflation sensitivity in line with the economic cycle. When inflation or interest rates are expected to rise, for instance, companies with business models that contractually compensate for higher borrowing costs or inflation are overweighted.
Infrastructure is a major contributor to global emissions due to the dominance of utilities and transport companies. It is thus impossible to rule out environmental risks completely, but investors can nevertheless exert a particularly strong positive influence on them. Bantleon Select Infrastructure does this by excluding energy producers with an energy mix based mainly on fossil fuels. In particular, parts of the traditional energy sector such as oil exploration and production and coal-burning utilities are excluded.
Thanks to its focus on basic infrastructure, Bantleon Select Infrastructureis of interest above all for security-conscious investors. »Stocks in the basic infrastructure segment combine the benefits of low volatility compared with the broader market, growth and consistently high dividends,« notes Linhardt.