Case study of the First Sentier Investors Responsible Listed Infrastructure Fund
First Sentier Investors is launching its Responsible Listed Infrastructure Fund to Australian institutional and wholesale investors. The fund invests in the shares of global infrastructure companies that can contribute to, or benefit from, sustainable development. Portfolio manager, Rebecca Myatt, spoke to Industry Moves about her vision for the fund and why it doesn’t have any utility investments in Australia.
Why did you decide to launch this product to Australian investors now?
This product has been in Europe for three and a half years and at the beginning of this year opened up to UK investors.
We started to see demand in Australia for products such as ours. There is a demand for products really focussed around sustainable development, net zero carbon emissions and fighting climate change.
Our clients want a qualitative return as well as a quantitative return from their investment products and this fund provides that.
What goes into launching a new product? Did Covid cause any delays?
First off, it’s about identifying a gap in the market and then deciding and formulating how that can be met through an investment process.
Secondly, it’s having someone who is truly passionate about it and able to drive that idea into a reality. I joined First Sentier Investors’ global listed infrastructure team over 10 years ago and am very passionate about both infrastructure and climate change.
With regard to Covid delays, the whole world has now come to realise that we can’t remain in a hiatus forever. I think this year everyone has adapted to doing things over Zoom and just moving ahead. We’ve learned over the past year and a half that you can’t wait for things to change - you just have to keep pushing forward.
How did you research market opportunities?
It was really driven by client demand. Being a global business has helped, as we’re able to see what different clients want around the world.
We saw the demand for a product like this in Europe five years ago and no one was really delivering. We then saw the demand move to the UK and now Australia and we now have a product with a three and a half year track record that we can offer here.
What challenges did you face and how are you overcoming them?
I think there are always challenges being ahead of the curve as to where the demand will come from.
It’s all about demonstrating the role infrastructure can play in achieving a net zero world; and demonstrating that we can achieve all the goals we have set, with the investments we have.
What is your vision for the fund?
The vision I have for the fund is to consistently invest in and channel capital towards infrastructure companies that can contribute to, or benefit from, sustainable development. We all have a role to play in fighting this climate emergency, and I see this as my small way of playing a part.
I think people sometimes look at infrastructure and think ‘it has a large carbon footprint, it’s too hard’, but that is where the opportunity lies - the opportunity for meaningful change to occur. We can’t keep thinking that we can defer the energy transition. If we don't make these changes now, and get behind the renewables build-out, nothing will change in the future.
While sustainability is about much more than climate change, this is the single most pressing issue for the fund today.
Does the fund have any investments in Australia?
To date we don’t have any utility investments listed in Australia. We need clear policy to really understand how we can [make investments here]. Whilst policy remains unclear, corporates are circumventing this through corporate PPAs (corporate power purchase agreements) and ensuring that they are doing their bit towards decarbonisation
We’d like to see more policy certainty and a stronger commitment to net zero emissions in this country.
How are corporates and institutional investors using this investment class?
Institutional investors are using this asset class to deliver change and to be part of that change. We don’t believe a strategy of divestment carries enough weight. An approach that involves engagement with companies to encourage tangible outcomes is the way the climate emergency gets solved.
Encouragingly, for many of the companies that we invest in, renewables are now the cheapest source of energy so further investment in renewables makes complete economic sense.