Web- Real Assets - long term appeal

Multi sector blend offers broad and diverse opportunity set

High-quality assets with pricing power = inflation protection

Growth driven by secular megatrends: - population growth - energy transition - technology / data

Higher income from reliable dividends*

Essential building blocks of society with low economic sensitivty

Transparency of listed pricing and liquidity

*Higher income compared to broader equity markets or sector-specific strategies

The type of Real Assets we target can generally manage the risk of rising inflation against their income streams, and many can also see dividends benefits from rising inflation. Real Assets with pricing power can often accelerate cash flows to match, or in some cases outpace, inflation due to regulatory and contractual inflation escalators and pass-through mechanisms, doing so in a way that the pass through is affordable / acceptable to underlying users without impacting demand.

By blending listed Real Estate with Infrastructure & Utilities, we can access a broader opportunity set and limit individual security, sector and industry concentration risk. We believe this helps to ensure a more stable income stream and avoid drawdowns or income shocks in any one stock. Blending also provides the ability to move between asset sub-sectors when valuation opportunities arise. The addition of Real Estate provides further access to urban population growth.

By focussing only on listed securities, we can evade the common problems that direct-investing or unlisted investments in property, utilities and infrastructure face while retaining the same economic exposure. Listed Real Assets avoid high concentration in single assets through exposure to hundreds of underlying assets across different regions and sectors. This provides daily liquidity and clear pricing transparency.

By investing where dividends are a larger part of a stock’s total return, and by diversifying across a blend of listed REITs, infrastructure and utilities, we aim to provide more certainty in the dollar income amount of income distributions, no matter what the capital gains or losses may be. We also specifically screen out companies with development risk, and favour known income payers with stable cash flows. Our process includes a Sustainable Dividend assessment that looks at a stock’s ability to maintain dividends through all different stages of the cash flow cycle, including downside scenarios.

We focus on listed Real Assets that are the true essential building blocks of the economy. These include diverse assets such as supermarket-anchored shopping centres, data centres, telecom towers, healthcare facilities, ports & toll roads, gas & water pipelines, and renewable electricity generators. Due to their essential 'every-day' nature, demand for the services provided is typically inelastic and less correlated to the economic cycle. Even in times of market volatility and inflation, high quality Real Asset companies can continue paying regular dividends and provide defensive growth.

Our key thesis is that as urban populations grow, there is a higher demand for Real Assets to service everyday needs. For example, there is more demand for power, water, mobile data, and retail & office floor space. This demand helps to sustain and grow dividends irrespective of the business cycle. By focussing specifically on higher growth cities and regions, we can tap deeper into this future defining, global megatrend. Listed Real Assets are also positioned to benefit structurally from the transition to cleaner energy sources.