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ALI, ARGO GLOBAL LISTED INFRASTRUCTURE LIMITED
nipper
post Posted: Jan 11 2019, 12:42 PM
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Posts: 5,133
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about as sensible a Monthly Commentary as they come:
QUOTE
Equity markets worldwide continued to tumble in December, weighed down by a range of factors including fears of slowing global economic growth and ongoing US/China trade tensions. Despite rallying strongly after Christmas, the MSCI World Index fell -4.2% for the month and ended the December quarter down -11.0% in A$ terms. Australia’s share market continued its descent with the S&P/ASX 200 Accumulation Index down -0.1% for the month to end the quarter down -8.2%. In contrast, global listed infrastructure stocks have displayed resilience amidst volatile market conditions.

With investors positioning their portfolios more defensively in response to global macro-economic and geopolitical risks throughout the December quarter, the performance of global listed infrastructure stocks has substantially outpaced broader equities. For the month of December and the December quarter, AGLI’s portfolio outperformed the MSCI World Index by +3.7% and +10.1% respectively, in A$ terms.

The relative performance of global listed infrastructure stocks compared to broader equities demonstrates the downside protection offered by the asset class. In addition to stable, long-term returns through exposure to a diversified portfolio of securities, we believe investing in global listed infrastructure provides investors with a ‘defensive layer’ in their portfolios.

Despite some investors’ increasingly pessimistic view of many asset classes, the outlook for global listed infrastructure remains positive. In our view, growth in the demand for private sector investment in infrastructure is supported by long-term, structural factors, including powerful demographic forces and significant government funding shortfalls.

- an asset class that is somewhat non-correlating to the others ... and ALI trading 10% below NTA at present



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Sep 24 2018, 09:29 PM
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Not specifically on ALI,
QUOTE
With no shortage of attention-grabbing headlines from the royal commission, an interesting side note from the superannuation round relates to the portfolio implications of some funds being able to hold assets that aren't broadly accessible to other investors.

In particular, infrastructure assets were named as a contributing factor to the performance differentials between some super funds.

While there are certain barriers to investing in unlisted infrastructure assets, such as illiquidity, there are other strategies that could have delivered similar outcomes over the long term which are readily accessible to investors at both the institutional and individual level.

Global listed infrastructure is one example. With the benefit of diversification and high liquidity, this asset class has experienced a large take-up by investors globally. Recent Morningstar data shows that allocations to infrastructure within multi-asset funds has grown by around 400 per cent over the past five years.

The price movements of global listed infrastructure are likely to experience greater volatility than unlisted counterparts, owing largely to the marked-to-market movements of listed securities. But analysing the volatility of earnings for listed infrastructure shows a material reduction in earnings volatility compared with the broader equity market.

During the past 10 years, which includes the impact of the global financial crisis, the volatility of global listed infrastructure earnings was just 1.5 per cent a year compared with global equities of 13.1 per cent a year. In addition to lower volatility, global listed infrastructure has also been characterised by a higher dividend yield than the global equity market, which may also help to explain investor demand in an environment of falling yields.

With hindsight, the case for global listed infrastructure looks appealing, particularly when you overlay the high liquidity compared with unlisted counterparts. Over the past 10 years, the sector has returned more than 8 per cent a year with 20 per cent less volatility than the global sharemarket.

It should be pointed out that the environment for infrastructure investments has been favourable, with three decades of falling bond yields providing support for infrastructure valuations. This is not unique to listed infrastructure, with global demand also pushing up valuations for unlisted assets..
... though it could be said a listed entity offers transparency, and ability to enter/ exit (and the sector's lower volatility helps)

https://www.afr.com/markets/equity-markets/...20180920-h15n8l



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Aug 28 2017, 09:02 PM
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In Reply To: Mags's post @ Aug 28 2017, 06:02 PM

underperformance is always 'spun', a narrative accentuating the positive aspects while glossing over the inconvenient bits. Oh well; I didn't buy at IPO so I'm treading water. Not going to sell, as the more predictable income streams have low vol, correlation to other asset classes is low and it is a diversifier. As they say, infrastructure companies own long-life assets and I'm in it for the long term

(about 5% of all)






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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
Mags
post Posted: Aug 28 2017, 06:02 PM
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Yeah, it's been pretty disappointing this on. Is it a case of be greedy when others are fearful????? Or is it just a dog?

 
nipper
post Posted: Aug 28 2017, 10:03 AM
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Posts: 5,133
Thanks: 1901


QUOTE
Over the past decade, investor interest in having an infrastructure allocation has surged amid a growing emphasis and desire for broader diversification. The listed infrastructure market offers an increasingly popular way to access infrastructure assets, combining the key investment attributes of private infrastructure with the benefits of liquidity and daily pricing.

Infrastructure companies own long-life assets that provide essential services and facilitate economic progress vital to everyday life. While the assets themselves are very different, they are generally united by having monopolistic business models, with limited competition and high barriers to entry due to the capital-intensive nature of their respective industries. They also typically have resilient, inelastic demand - their customers will continue to pay for electricity and water, for instance, regardless of the economic landscape.

Infrastructure companies tend to have more predictable income streams than global equities, often linked to inflation. As a result, many infrastructure businesses have historically shown the versatility to perform well in periods of both rising and easing inflation, as well as through different points in the economic cycle.


Investment Performance
QUOTE
AGLI's relative investment performance this year was a tale of two contrasting halves. The exuberance following Trump's election led to infrastructure underperforming the very strong broader equity markets in the first half of the financial year, but in the second half, the sector outperformed equity indices.

This is highlighted in the table below, which also shows a low correlation between the returns of the global infrastructure sector and the Australian equity market, emphasizing the diversification benefits that a holding in AGLI can add to a portfolio dominated by Australian equities.

Accumulated performance ..............6 mths to 31 Dec 2016 ... 6 mths to 30 June 2017
QUOTE
Infrastructure:
AGLI - NTA return after costs and tax........ -2.1% .... +5.6%
AGLI - Share price return........................... -7.5% ... +11.1%
Infrastructure sector - benchmark ........... +0.0% .... +6.3%

Broader equities:
World - MSCI World equity index (A$) ..... +9.8% .... +4.5%
Australia - S&P ASX200 Accum. Index .....+10.6% .....+3.2%

Dividend of 2.5c unf (and 1c in prior 6 months). ALI is still serial underperformer - SP around $1.75 while NTA is $2.03. A share buyback announced to attempt to redress the gap



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: Mags  
 
nipper
post Posted: Jul 13 2016, 11:38 AM
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Posts: 5,133
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In Reply To: nipper's post @ May 17 2016, 04:35 PM

QUOTE
...observers will notice an increasing amount of Strategic Asset Allocation theory and discussion being directed toward
Global Infrastructure. The infrastructure sub-category fits within the Equities asset class with both listed and unlisted products available to investors. The category typically encapsulates assets within the Transport (toll roads, ports and airports), Utilities (electricity, gas and water) and Communication sectors (towers and satellites).

Infrastructure assets offer essential services to an economy. User demand is predictable and reliable through economic cycles, and volume is usually price inelastic. Competition is limited, with market structures typically monopoly or duopoly. Assets are typically long-life, with high upfront capex followed by strong cash flow generation. Prices are often regulated and/or subject to longterm contracts. CPI-linked pricing is typically a feature, providing a quasi-inflation hedge. The nature of the cash flows means that infrastructure generally offers investors lower potential returns but with lower inherent risk when compared with traditional equities.

Investor demand for exposure to infrastructure asset returns is surging in response to the stability of infrastructure earnings in an otherwise uncertain economic environment. The ultra-low interest rate environment is also forcing yield seeking investors
into alternative income oriented investments. Overall the category is useful for delivering capital risk diversification and yield
enhancement within the Equity asset class.
Morgans

always follow the money !




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 


nipper
post Posted: May 17 2016, 04:35 PM
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In Reply To: Mags's post @ May 16 2016, 12:17 PM

the ALI estimate of NTA is back above $2.00 according to the weekly estimate of 13 May (unaudited)



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
Mags
post Posted: May 16 2016, 12:17 PM
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In Reply To: nipper's post @ May 16 2016, 11:40 AM

QUOTE
long term the AUD should average lower?


That's my view. I'm very bearish long term on the AU$, short term though who knows. I expect our banking/finance industry "problems" to continue to pick up pace, But then again compared to what JPN, EU, face, who knows right?

 
nipper
post Posted: May 16 2016, 11:40 AM
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In Reply To: Mags's post @ May 16 2016, 10:33 AM

someone described infrastructure as 'getting rich slowly'. I think the major issue with ALI was the timing; generally, markets sold off since IPO - hard to swim against that tide.

Stable earnings are the attraction, as is an ability to lift prices, within the constraints of regulation ..... but long life can lead to leverage, and exposure to fluctuating bond markets.

And, that said, the monthly discussion that ALI puts out shows short term pricing up, dowwn and all over the place, for the underlying assets. Hence the diversification can smooth out returns. I didn't take up at the float, but have bought in at 1.88 and 1.68. I like the idea of the fund being unhedged - long term the AUD should average lower?



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
Mags
post Posted: May 16 2016, 10:33 AM
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In Reply To: nipper's post @ May 14 2016, 08:29 PM

I did jump on the IPO, and still not sure how I feel about this one. I am far from a trader, and am well aware I 'should' have dumped them early one.

Trouble is, I dis-believe anyone who says they know where the market is headed short term. We're along way from using fundamental values on many, many stocks, locally and especially globally.

So infrastructure, in my eyes, is kind of a very conservative bet in a very weird environment. Not a great bet, but not the worst, from a fundamentalist point of view.

 
 


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