Despite continued volatility, global equity markets ended the quarter with positive returns. The MSCI World Index returned 8.18%, bringing its year-to-date return to 17.29%. Concern over rising interest rates weighed on global infrastructure securities during July and August relative to broader global equities. These concerns were eased in September by the Feds announcement that it would delay its tapering of quantitative easing, and the S&P Global Infrastructure Index closed the quarter with a return of 7.52%. Within infrastructure, the slower-growth sectors of electricity transmission and distribution underperformed, while the transportation sectors outperformed. In addition, the communications area posted relatively weak returns, driven by tower companies, which tend to be more levered and therefore more vulnerable to fears related to rising rates. Master Limited Partnerships (MLPs) underperformed the broader infrastructure sector during the quarter, with the Alerian MLP Total Return Index returning 0.7%.
The Multi-Manager Global Listed Infrastructure Fund returned 7.16% for the quarter, compared with the S&P Global Infrastructure Index return of 7.52%. The Funds sector allocation represented a drag on returns during the quarter. More specifically, an underweight to transportation was the most significant headwind to results. The underweight is driven by Brookfield, which has a greater focus on midstream pipeline companies and North American rail.
For the quarter, Brookfields positioning detracted from returns. Alternatively, sub-adviser Lazard was notably strong, benefiting from favorable security selection across the portfolio. Their sector selection had little impact on results.
If you're a long-term investor looking to diversify your investments by pursuing the income and growth potential of globally listed infrastructure securities, then this Fund may be right for you. It is intended for investors who are aware that foreign markets may involve additional risks, such as social and political instability, reduced market liquidity and currency volatility.
- Invest at least 80% of net assets in securities of infrastructure companies listed on a domestic or foreign exchange, normally investing at least 40% (and up to 100%) in infrastructure companies tied to foreign countries, including emerging and frontier markets.
- Select complementary managers from a broad universe of investment managers.
- Blend managers into a single fund in an effort to provide an attractive combination of risk/return.