GLOBAL - ETF Securities (ETFS) has listed two new infrastructure funds which the firm believes are particularly suitable for pension funds.
The ETFX Dow Jones Brookfield Global Infrastructure Fund and ETFX Dow Jones Brookfield Emerging Markets Infrastructure Fund both track specialist infrastructure indices created by Dow Jones Indexes and Brookfield Asset Management, a global asset manager focused on property, power and infrastructure assets.
Constituents in the Dow Jones Brookfield Global Infrastructure Index and the Dow Jones Brookfield Emerging Markets Infrastructure Index are required to derive a significant amount of cash flow from infrastructure lines of business and aim to provide exposure to all sectors of the infrastructure market, from oil & gas storage and transportation to toll roads and ports.
ETFS said the indices offer broader exposure to pure-play infrastructure than many other listed infrastructure products currently available to investors in Europe. The long-term income streams offered by the sector also make them suitable for pension funds.
Martin Arnold, Senior Analyst at ETF Securities said: "Infrastructure investing is a way to play the global recovery theme. The high upfront costs of infrastructure projects are recouped over a long period of time, thereby generating stable and predictable cash-flows.
"The stable, long term income streams that infrastructure assets generate appear to fit appropriately with the liability profile of many pension funds. Pension funds can also benefit from infrastructure assets generally providing better risk return profile than global equity, real estate and commodity markets."
Arnold also believes there is ample opportunity for pension investment in the asset class to grow, particularly in Europe and the UK.
He added; "With the emergence of alternative investments, the private sector has become increasingly involved in infrastructure project funding in recent years. However, there is scope for pension fund investment to grow: while pension funds dominate that institutional investment landscape in infrastructure assets, estimates suggest that of the $16.2trn funded pensions market only around 0.25% of pension fund assets are invested in infrastructure investments on a global scale.
"In particular, Europe and the UK lag countries like Australia in pension fund investment. While Australian superannuation funds allocate around 5% of assets to infrastructure, only around 1% of UK and European assets are invested in the infrastructure space."
The ETFX Dow Jones Brookfield Global Infrastructure Fund currently provides exposure to 90 securities across 20 countries with a focus on developed markets. The ETFX Dow Jones Brookfield Emerging Markets Infrastructure Fund focuses on developing economies and currently provides exposure to 71 securities across 16 countries.
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