Transcription of Finance News Network Interview with Redpoint Investment Management Head of Portfolio Management, Ganesh Suntharam and Senior Portfolio Manager, Alex Stephen
Lelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me from Redpoint Investment Management to discuss its Global Infrastructure Fund is Head of Portfolio Management, Ganesh Suntharam and Senior Portfolio Manager, Alex Stephen. Ganesh, Alex, welcome to FNN.
Ganesh Suntharam: Thank you for having us Lelde.
Alex Stephen: Good to be here.
Lelde Smits: Firstly Ganesh, Redpoint’s Global Infrastructure Fund gives investors the opportunity to access global infrastructure. Why do you believe this asset class is appealing in Australia’s low rate environment?
Ganesh Suntharam: The trend you’re seeing in Australia with reducing interest rates has been a global phenomenon within developed markets, for a number of years now. You’ve seen that trend continue across Europe, America and a number of other countries. The complication for retail investors in that type of environment is putting your cash, your savings, into a term deposit is no longer appealing.
So the question for retail investors is, where can I actually get my yield from? And when you look across the Australian landscape, there has been a large focus on yield from banks. But from our point of view, we would say that a global listed infrastructure Fund, focused on good quality assets, would be able to deliver appealing levels of yield. And is much more diversified than traditional products or term deposits.
Lelde Smits: The Fund aims to be globally diversified for risk reasons. Why is this an important strategy?
Ganesh Suntharam: The key differentiator for our strategy is the fact that we are quite broad in our investments. We own a number of assets that span across the world, including gas pipelines in Canada, railroads in Japan and water assets across Europe. So from a retail investor’s perspective, that Fund is actually quite well diversified. With a single investment, you’re making an investment into a hundred odd companies, spanned across the world and diversified in terms of yield.
Lelde Smits: Can you explain how you execute this strategy?
Ganesh Suntharam: In terms of execution we look to quality comes first for us. So we have a strong focus on quality. How much cash flow is the company generating, how much balance sheet debt does the company carry, and does the company have good sustainable practises? So the hundred investments that I mentioned to you before are made up of companies, which have all of those types of characteristics. And that’s what allows us to capture the return characteristics that we’re after.
Lelde Smits: Thank you Ganesh and Alex, what conditions does the Fund usually perform the best in and how has it performed so far this year?
Alex Stephen: The Fund has performed very well in a rising market. So after the last 12 months, it’s up 16.8 per cent and over the three years it’s actually up 19.2 per cent on an annualised basis. So it does very well in rising markets, but we also believe the Fund is going to perform well in falling markets as well. It’s a diversified product as Ganesh has mentioned, and it’s a defensive asset class within equities. So it should provide a stable yield stream as markets are falling as well.
Lelde Smits: Could you highlight one of your positions and explain why it is a compelling investment?
Alex Stephen: GDF SUEZ (FRA:GZF) is a large multi utility company based in France. It was combined between the merger of GAZ de France and SUEZ environment, which came together in the mid-2000s. So it’s been roughly seven or eight year now that it’s been a combined entity. It’s across all utility areas in Europe, it has gas, electricity, waste and it’s a multi utility network. So we add it into the portfolio as a diversifier across European assets and it’s a very strong performer.
Lelde Smits: Finally Alex, what assets are currently providing the most opportunities for the Fund?
Alex Stephen: Some recent acquisitions for us have been within the airport space, across the globe actually, and also within the communications satellite areas. So we’ve bought airports in New Zealand - Auckland International Airport Limited (ASX:AIA, NZE:AIA), in Paris, in Zurich. And in the satellite space, we’ve bought Eutelsat Communications SA (EPA:ETL), which is a French satellite company.
So we’re diversifying our exposure across those areas and really looking to pick up the characteristics that Ganesh has mentioned, from the return profile of these companies.
Lelde Smits: Ganesh, Alex, thank you for the update from Redpoint Investment Management.
(20min delay)
