RARE Infrastructure Value Fund - I Class
Quarter End March 2015
Performance
1 month 3 months 1 year 3 years 5 years Inception
RARE Infrastructure Value Fund - I Class
BENCH:OECD G7 Inflation Index +5.5%
Over / under performance
S&P Global Infrastructure Index
MSCI AC World Index
2.2%
0.1%
2.1%
3.5%
2.8%
13.5%
0.4%
13.1%
11.6%
15.3%
33.6%
6.4%
27.2%
33.4%
35.3%
------
------
17.4%
6.8%
10.6%
18.0%
19.8%
Risk Return (Since Inception)
Annualized Return
20
19.5
19
18.5
18
17.5
9
9.5
10
10.5
11
11.5
12
12.5
13
Regional Breakdown
North America
Western Europe
Asia
Pacific
South America
Middle East
Cash
% of Fund
Sector Breakdown
Gas
Electric
Railway
Communications
Toll Road
Seaport
Airport
Water
Cash
% of Fund
Utilities / User Pay Split
33.9
33.5
Utilities 52%
User Pay 45%
Cash 4%
16.9
4.9
4.1
3.2
3.6
Contribution by Sector (Local)
25.7
22.2
0.8
16.7
0.5
0.5
10.8
7.0
5.6
4.5
3.8
3.6
1.1
0.9
0.5
1.5
0.0
0.0
Gas
Electric
Railway
Communications
Toll Road
Seaport
Airport
Water
Cash
13.5
Annualized Standard Deviation
RARE Infrastructure Value Fund - I Class
S&P Global Infrastructure Index
MSCI AC World Index
Growth of a $10,000 Investment
18,000
17,000
16,000
15,000
14,000
13,000
12,000
11,000
10,000
Apr
12
Jul
12
Oct
12
Jan
13
Apr
13
Jul
13
Oct
13
RARE Infrastructure Value Fund - I Class
1.
2.
3.
4.
Jan
14
Apr
14
Jul
14
Oct
14
Jan
15
Portfolio Characteristics
Portfolio Weighted
Average
Avg Market Capitalisation
RARE Div Yield (Forward)
Interest Cover
EV/EBITDA FY1 Est
Est. 3-5Yr EPS Growth
Return on Equity
Return on Asset
Results based on FactSet/RARE data
Apr
15
BENCH:OECD G7 Inflation Index +5.5%
Sources: RARE internal calculations for RARE Infrastructure Value Fund - I Class. All index data sourced from Factset. Results over one year annualised.
Fund Performance is net of fees.
All values in EUR and net of withholding taxes for benchmarks if applicable. Non EUR values converted into EUR using FactSet Forex data.
Performance inception date for RARE Infrastructure Value Fund - I Class is 30/04/2012.
Top/Bottom Portfolio Contributors
Mar 2015
24.1bn
3.5%
4.7x
12.0x
9.5%
12.0%
5.2%
5 Highest
AENA
Tokyo Gas
Vinci
Fraport
Groupe Eurotunnel
5 Lowest
CSX
American Tower
Union Pacific
Norfolk Southern
National Grid
Ending
Total Contribution
Weight % Return % To Return %
15.11 112.60
3.15
-38.36
0.74
4.36
16.73
0.66
4.88
16.96
0.65
3.03
15.88
0.57
2.84
24.67
0.53
14.92
-32.99
-1.05
2.91
-8.17
-0.26
3.97
-4.75
-0.22
2.15
-8.67
-0.20
3.24
-5.58
-0.20
2.65
-5.82
-0.17
Contact Us
Email
Website
Telephone
Summary
In the March quarter, RARE returned +13.5% outperforming its
benchmark +0.4% and underperforming the MSCI AC World Index
+15.3%. During the quarter global developments were supportive of
equities. In Europe this was driven by the interim agreement between
Greece and its bailout creditors and the rise in consumer and business
confidence (EuroStoxx +17.9%). A continued dovish bias by the US
Federal Reserve also supported market sentiment and the S&P500
ended up +1.0%. The prospect of further monetary policy easing in
China was also positive.
Positioning and Outlook
In Europe, the ECB's QE has driven core and peripheral bond yields to
record lows. RARE now expects there will be a significant period of low
bond yields and we are becoming increasingly more constructive on
Europe. Consumer and business confidence are showing signs of
improvement and we believe growth across Europe may temporarily be
above trend. In Europe, RARE will continue to add to names displaying
solid fundamentals and strong valuations.
RARE’s outlook for the US also remains favorable. We expect a
progressive normalisation in monetary policy and above consensus
growth driven by corporate spending; improvement in labour markets,
Portfolio Performance
During the March quarter, sector contribution was led by airports and continued housing recovery. In line with this thesis, RARE
(+1.50%), electric (+1.13%), toll roads (+0.87%), gas (+0.82%), continues to position in favour of growth orientated Infrastructure and
Utility securities throughout North America.
communications (+0.50%), railway (+0.48%), and seaports (+0.46%).
The only sector detractor for the quarter was water (-0.02%).
Whilst Chinese growth continues to slow in an orderly way, there is
certainly increasing concerns as consensus forecasts have steadily
Regionally, Western Europe (+3.59%), Asia (+1.86%), the Pacific downgraded in recent months.
(+0.30%), South America (+0.24%) and the Middle East (+0.10%) all
added positive returns to the portfolio.
In Japan we expect sustained modest Japanese growth resulting from
looser monetary policy, lower oil prices and fiscal stimulus.
The only regional detractor was North America (-0.35%).
Microeconomic reforms will slowly improve productivity and change
corporate behaviour. Our Japanese holdings have performed very well
Airports were the strongest sector contributor for the quarter, recently.
especially in Western Europe where Spanish airport operator Aena
(+0.74%), Fraport (+0.57%) and ADP (+0.19%) all added positive returns RARE continues to look for companies with solid balance sheets, strong
to the portfolio.
management and supportive regulatory environments or long term
contracts that help to underpin revenues, cash flows and dividends.
Our focus is to provide the best risk adjusted returns to our investors.
Water was again the biggest detractor in the March quarter. Pennon
(-0.13%), a UK water distributor detracted from performance.
On a stock specific basis, French toll road operator Vinci (+0.65%),
Japanese gas operator Tokyo Gas (+0.65%) and French rail company
Groupe Eurotunnel (+0.53%) all added positive returns to the portfolio.
invest@RAREinfrastructure.com
www.RAREinfrastructure.com
+61 2 9397 7350
Quarterly Stock Highlight
This quarter we review the listed infrastructure company Red Eléctrica,
which is the owner and operator of the national electricity network in
Spain.
Electricity transmission is a fully-regulated activity, with allowed
returns that are set for a 6-year period. Red Eléctrica is one year
through the current period (running from the start of 2014 until the
end of 2019).
The relatively long regulatory period gives Red Eléctrica exceptional
visibility of revenues for the next five years. This is almost as long as the
8-year regulatory periods for National Grid in the United Kingdom
(which is another portfolio holding).
Red Eléctrica can currently borrow money with a Cost of Debt that is
about 5% lower than their allowed return of 6.5%, a significant benefit
for shareholders. The company also receives an incentive if they
maintain high availability of the network. Management has a very
strong track record of outperforming regulatory assumptions and the
company has successfully increased profit margins.
The shares are attractively valued and offer a very appealing 4.2%
dividend yield, growing by 7% per annum for the next five years.
Richard Elmslie, Nick Langley, Shane Hurst & Charles Hamieh
Investment Committee Members
Top 10 Positions
Iberdrola
Kinder Morgan
Sempra
Vinci
Tokyo Gas
American Tower
SBA Communications
Crown Castle
Norfolk Southern
DP World
Top 10 Total
Ending Market Cap.
Weight %
($EUR bn)
5.52
37.5
5.21
83.2
4.90
25.0
4.88
29.5
4.36
14.3
3.97
34.8
3.45
14.0
3.43
25.7
3.24
29.5
3.17
16.7
42.13
310.2
Important Information
This Fact Sheet is for marketing purposes only and does not constitute an offer to subscribe for shares in the Fund. While the information contained in this document has been prepared with all reasonable care, neither RARE Investment Funds plc nor RARE Infrastructure Limited, the promoter and
investment manager of the Fund, accepts liability or responsibility for errors, omissions or misstatements, however caused. This information is not personal advice and has been prepared without taking account of your objective, financial situation or needs. Investors should be aware that past performance
is not indicative of future performance. Returns can be volatile, reflecting rises and falls in the value of underlying investments. The fact that shares in a particular company have been mentioned should not be interpreted as a recommendation to buy, sell or hold that stock. Investors, or potential investors,
must confirm they have received or accessed the most recent Key Investor Information Document relating to the relevant share class and should obtain a copy of, and review, the full prospectus prior to making any investment decision. The risk factors relating to the Fund are described in the prospectus.
RARE Investment Funds Plc, along with RARE Infrastructure Value Fund and RARE Emerging Markets Fund, as its sub-funds, are authorised and supervised by the Central Bank of Ireland.