Questions Relating to RARE Infrastructure
Who is the RARE team and what are their backgrounds?
Do the team members have global experience in infrastructure?
How is RARE different to its competitors?
What is RARE’s investment philosophy?
How is RARE’s investible universe researched?
What is the relationship with Treasury Group?
How do I contact someone at RARE?
Questions relating to the asset class
What are global infrastructure assets?
Why invest in global listed infrastructure?
What are the benefits of investing in global listed infrastructure?
What is the total market capitalisation and liquidity of the global infrastructure sector?
What are the sector components of global listed infrastructure?
What is the sector and regional exposure of the RARE 200?
What are the growth expectations of the sector over the next 10 years?
How do the inflation adjusted revenues of many infrastructure assets impact returns?
Questions Relating to RARE Infrastructure
Who is RARE?
RARE Infrastructure is a boutique investment management company specialising solely in the rapidly growing and increasingly recognised asset class of global infrastructure.
RARE invests in the securities of major infrastructure projects and developments such as airports, gas, electricity, water and roads, which provide essential ongoing services to communities in both developed countries and emerging markets.
RARE stands for Risk Adjusted Returns to Equity. It is our job to identify, analyse, invest and manage a wide range of global infrastructure securities with the aim of delivering stable, reliable dividends and capital growth for our investment clients.
RARE values its long term relationships with both retail and institutional investors.
RARE Infrastructure (AFSL 307727) is not associated with any financial institution.
Who is the RARE team and what are their backgrounds?
Our small and dedicated team of highly experienced investment managers and securities analysts has 120+ combined years of experience in global infrastructure and 80+ combined years in funds management.
Led by founders and senior portfolio managers, Richard Elmslie and Nick Langley, our team has a broad skill set developed from many years in funds management, research and corporate advisory roles in both Australian and international markets.
Do the team members have global experience in infrastructure?
Absolutely.
Our people’s breadth of experience and knowledge is a significant point of difference and is a major factor in our investment management company’s ongoing success.
Our small and dedicated team has a broad skill set developed from many years in funds management, research and corporate advisory roles in both Australian and international markets.
How is RARE different to its competitors?
There are three primary differences between RARE and its competitors:
- RARE is not aligned with or owned by any bank, broker or institutional investor.
- The RARE team is dedicated to researching and investing in infrastructure securities only. We conduct our own infrastructure research using a rigorous analysis process and hence we do not pay commissions to outside advisors.
- We provide a highly personalised service incorporating not only careful selection of global infrastructure securities and expert funds management but also reliable and relevant information and friendly assistance to all of our clients.
Who are RARE’s clients?
RARE Infrastructure manages money for large corporate, industry and government pension funds and other institutional investors while also welcoming investment from retail investors in Australia, Canada and the United Kingdom.
What are RARE’s strategies?
RARE has four main fund management strategies.
Global Value Infrastructure
The Global Value Infrastructure strategy comprises global infrastructure securities in predominantly developed countries with a minimum 75% exposure to developed economies such as the OECD, EU, Hong Kong and Singapore.
The strategy comprises between 30 and 60 stocks drawn from an investment universe of over 200 stocks under research by our team. They are predominantly mid and large cap stocks with large diversification across geographic regions and sectors.
Emerging Markets Infrastructure
The Emerging Markets Infrastructure strategy comprises global listed infrastructure securities that derive the majority of their earnings from emerging economies such as the BRIC (Brazil, Russia, India and China).
The strategy comprises between 25 and 60 stocks drawn from an investment universe of approximately 150 stocks under research by our team.
Real Asset Infrastructure
More information coming soon.
Yield Infrastructure
More information coming soon.
What is RARE’s investment philosophy?
RARE’s investment philosophy is that active management of investments in global listed infrastructure assets provides the opportunity to achieve superior medium to long term returns with attractive risk/return characteristics for investors.
The construction of our managed funds is carefully executed to ensure appropriate diversification and weighting across global infrastructure stocks, sectors and geographic regions.
Stock selection is based on thorough research and analysis undertaken by RARE’s small and dedicated team of exceptionally experienced researchers, analysts and specialist global infrastructure investment managers.
Risk Adjusted Returns to Equity (RARE) are paramount and we aim to continually exceed our performance targets and benchmarks.
Buying these assets in a listed form provides the benefit of liquidity and the opportunity to construct a diversified portfolio.
How is RARE’s investible universe researched?
RARE screens all global listed stocks to extract those securities that exhibit infrastructure characteristics.
The team then applies various financial valuation and liquidity screens to filter these securities to a more narrowly defined universe of securities known as the RARE 200.
The RARE 200 comprises 200 – 250 global infrastructure companies.
Based on the RARE team’s analysis, the RARE 200 is reduced to a focus list of approximately 80-120 companies which are deemed worthy of in-depth analysis.
The RARE research team undertakes a detailed cash flow and valuation analysis of each stock on the focus list, taking into consideration all aspects of the business under review including:
- Macro-economic factors affecting the future of the business
- Political and regulatory issues
- Assessment of stability and reliability of earnings
- Assessment of the capital structure
- Assessment of the management team
What is the relationship with Treasury Group?
Treasury Group Limited is the holding company of an Australian financial services group and is listed on the Australian Securities Exchange (Ticker: TRG).
Its business is to invest in and support small to medium-sized boutique fund managers such as RARE Infrastructure.
RARE has appointed Treasury Group Investment Services Limited to provide compliance, risk management, HR, institutional marketing and other services.
Treasury Group Investment Services Limited is a wholly owned subsidiary of Treasury Group Limited and provides administrative and operational services to the fund management companies in which Treasury Group Limited has an interest.
As at 30 June 2011, Treasury Group Limited had an interest in nine boutique fund managers who together control assets worth in excess of AUD $16.8 billion.
Treasury Group Limited website
How do I contact someone at RARE?
Please contact RARE Infrastructure on -
Telephone: +61 2 9397 7300
Email: Click here
Questions relating to the asset class
What are global infrastructure assets?
Global infrastructure assets are long term developments or projects serving communities around the world. They are assets that communities and economies require to function and prosper, such as airports, gas, electricity, water and roads.
Why invest in global listed infrastructure?
Given the long term, essential service qualities of global infrastructure, investors are increasingly viewing this asset class as an important cornerstone element of their investment strategy.
Global infrastructure assets possess the following highly attractive investment features:
Longevity
Global infrastructure assets generally have long life spans beginning with a large capital investment at the green field (construction) stage then progressing through development to full maturity and long term operations.
Reliability
Global infrastructure assets are generally highly resilient to economic conditions and demand is largely predictable because they represent essential community services.
Attractive Yields
Global infrastructure assets, particularly mature assets, generally offer comparatively higher yields (dividends) due to greater predictability of long term cash flows and earnings.
Protection from Inflation
Global infrastructure assets are generally largely protected from inflation as prices for essential community services such as gas, electricity and water are often indexed to inflation.
Low volatility
The global infrastructure sector is generally less volatile with a limited correlation to other investment sectors as its assets are primarily essential community services attracting predictable long term demand and hence delivering stable long term earnings.
Low Maintenance & Fixed Operating Costs
Global infrastructure assets are generally low maintenance and require little ongoing capital expenditure relative to operating cash flows. The operating cost base is also largely fixed.
Monopolies
Many global infrastructure assets, such as utilities, have legal or economic market monopolies meaning their returns are not subject to competitive market forces.
What are the benefits of investing in global listed infrastructure?
Global listed infrastructure is an exciting and growing investment class in both developed countries and emerging markets. The main benefits of long term investment are:
- Longevity and stable returns
- Low volatility
- Low maintenance and fixed operating costs
- Low correlation to other asset classes, including global equities
- Protection from inflation
- Diversification across geographic regions, sectors and securities
- Access to a growing asset class
- Liquidity
For more information, see ‘Why invest in global listed infrastructure?’
What is the total market capitalisation and liquidity of the global infrastructure sector?
The market capitalisation of RARE’s universe of global listed infrastructure securities was USD3.3 trillion as at December 31 2011.
The more narrowly defined RARE 200 had a market capitalisation of USD1.58 trillion as at December 31 2011.
The RARE 200 comprises between 200 – 250 global listed infrastructure securities. Based on the RARE team’s analysis, the RARE 200 is reduced to a focus list of approximately 80-120 companies which are deemed worthy of in-depth analysis.
The daily liquidity of the RARE 200 as at December 31 2011 is approximately USD35.9 million, enabling relatively high liquidity to acquire and dispose of securities at will.
What are the sector components of global listed infrastructure?
See ‘What are Global Infrastructure Assets?’
What is the sector and regional exposure of the RARE 200?
As at 31 December 2010, the sector and regional exposures are as follows:
RARE 200 by Sector
(USD2.0t market cap)
RARE 200 by Region
(USD2.0t market cap)
What are the growth expectations of the sector over the next 10 years?
RARE’s universe of global listed infrastructure companies is capitalised at USD3.3 trillion as at 31 December 2011. This is only a fraction of the entire global universe of infrastructure securities.
The majority of infrastructure assets are owned by governments. However, over the past decade governments around the world have increasingly chosen to dispose of these assets and tender for private ownership of new community facilities such as toll toads.
RARE therefore expects its universe of infrastructure investment opportunities to grow, providing investors with even greater sector and geographic diversification.
How do the inflation adjusted revenues of many infrastructure assets impact returns?
The revenues of many infrastructure businesses are linked to inflation through regulatory, legislative or contractual agreements. The price a consumer pays to use an infrastructure asset, such as water or electricity, usually increases with inflation.
RARE’s preferred benchmark for returns on clients’ portfolios is inflation + 5.5%, with inflation being the average of the G7 countries’ inflation rates.
