This article was written by expert contributor, Portfolio Manager Dania Zinurova from WAM Alternative Assets (ASX: WMA).
Introduction
Portfolio Manager Dania Zinurova delves into the fundamentals of alternative assets and the unique opportunities inherent in real estate, infrastructure, private equity, real assets and private debt.
Video: Infrastructure
As an asset class, infrastructure gives investors strong diversification benefits and access to attractive yield. It also provides exposure to the systems, facilities, essential services and businesses that underpin societal functioning and are often monopolies or have high barriers to entry. Three key subsectors within infrastructure are:
1. Social infrastructure: These assets provide vital community services and include schools, hospitals and housing.
2. Economic infrastructure: This refers to foundational systems for a society including transportation, ports and communication networks.
3. Industrial infrastructure: Vital services to industrial companies comprise this sector, with examples including waste water treatment facilities.
Given the long-term nature of infrastructure investments and their fairly reliable revenue streams, holding them in a portfolio can materially improve its return profile for those with a mid-to-long term investment horizon. However, careful portfolio positioning is essential, as not all strategies or assets produce the same results.
For example, strong demand from global institutional investors in recent years has resulted in inflated valuations in the large-cap infrastructure market, especially on large trophy assets such as major airports, ports or energy assets. However, mid-market infrastructure remains an appealing space to transact due to its smaller scale, and attractive deals being under the radar when they arise.
Dania discusses the strategies that can lead to compelling opportunities in this video.
Also in this series
- Add if you would like more from the author, Dania Zinurova, check out her appearance on the Equity Mates Investing Podcast: Private equity, water rights and other alternative assets with Dania Zinurov
Investing in alternative assets has traditionally been limited to these institutional investors, as well as high net worth individuals, due to the large minimum ticket sizes required for a single investment (often $10 million). WAM Alternative Assets (ASX: WMA) however, seeks to democratise investing in alternative assets for retail investors through its listed investment company (LIC) structure, which provides investors with access to a diversified portfolio of alternative assets while also providing them liquidity and a steady stream of dividends.
Prior to making an investment decision, retail investors should seek advice from their financial adviser. This document is intended as general information only.