The three key questions for all investors: Why this strategy? Why now? Why pick it over its peers?
Asked which parts of the infrastructure arena offer the most exciting prospects for investors, Megan Galligan, a global industry analyst at Wellington Management, is quick to pick a favourite.
“I might be a bit biased – I am a utilities analyst!” she concedes in the above WealthWhys video. “But this is probably one of the most exciting times for the utilities sector overall. You have multiple growth drivers that are translating to material growth both in capex and in the asset base utilities earn their allowed return on.
What this all means in practice is, you have visible and stable cashflows – and now we are seeing an acceleration in earnings growth in these businesses too”
“Those drivers include things like energy security and decarbonisation but there is now also power demand – to meet the new demand from data-centres and AI. That said, it is just compounding the fact that we have all of this ageing infrastructure that needs to be replaced at the same time power demand is materialising.”
Galligan, who had earlier been discussing the Wellington Enduring Infrastructure Assets strategy with delegates at The Wealth Forum North in mid-May, also sums up the broader investment opportunity in infrastructure.
Physical assets
“We are investing in listed infrastructure businesses that own physical assets across sectors such as utilities, toll roads, airports – midstream assets too,” she says. “And the thing that ties all those together is that they are regulated or contracted businesses.
“What this all means in practice is, you have visible and stable cashflows – and now we are seeing an acceleration in earnings growth in these businesses too, which makes it such an exciting time to be a part of infrastructure investing today.”
WealthWhys – with Megan Galligan, global industry analyst at Wellington Management
A full transcript of this interview can be found after this box while you can view the whole video by clicking on the picture above. To jump to a specific question, just click on the relevant timecode:
00.00: How do you define infrastructure and what is the investment opportunity?
00.37: What sectors are you currently excited about – and why?
01.15: Why should investors consider this strategy ahead of its peers?
How do you define infrastructure and what is the investment opportunity?
We are investing in listed infrastructure businesses that own physical assets across sectors such as utilities, toll roads, airports – midstream assets too – and the thing that ties all those together is that they are regulated or contracted businesses. What that means in practice is, you have visible and stable cashflows – and now we are seeing an acceleration in earnings growth in these businesses too, which makes it such an exciting time to be a part of infrastructure investing today.
What sectors are you currently excited about – and why?
Well, I might be a bit biased – I am a utilities analyst! – but this is probably one of the most exciting times for the utilities sector overall. You have multiple growth drivers that are translating to material growth in both capex and the asset base utilities earn their allowed return on.
Those drivers include things like energy security and decarbonisation but there is now also power demand – to meet the new demand from data-centres and AI. That said, it is just compounding the fact that we have all of this ageing infrastructure that needs to be replaced at the same time power demand is materialising.
What sets you apart from other infrastructure investors?
One thing we do differently is we are really focused on downside protection – and that translates to the portfolio and to the sorts of assets and businesses we are trying to identify and invest in. So typically, again, our focus on these regulated and contracted assets means we have less exposure to transport, which is far more cyclical than the sorts of businesses we like and would be interested in.
