The proliferation of data in today’s modern society is driven by the development of technology, including e-commerce, cloudbased applications, connected devices and the internet of things (IoT), but this insatiable appetite can only be met by the support of highly connected physical infrastructure assets such as data centres.
Data centres perform a critical function in the digital economy. They provide an indirect way of accessing the high growth potential of companies such as Amazon.com, Microsoft and Google whose business models are reliant on data centres for their long-term growth and success.
Location is key for the customer and provides a barrier to entry. Security, reliable power supply and functionality are also mission critical. For example, the payments company Visa experienced a network failure in June 2018, resulting in millions of transactions being declined, the issue being attributed to a glitch at one of its data centres.
Equinix has a global reach with more than 200 data centres spread across 24 countries and benefits from a business model with high recurring revenues. The company is classified as a real estate investment trust (REIT) and as such can be susceptible to short-term negative sentiment when interest-rate sensitives are out of favour, but our investment case is based on the structural growth in the industry which is reflected in the strong growth in profits and dividends that the company has delivered over time.
Looking under the bonnet
As the M&G Global Listed Infrastructure Fund’s management team celebrates three years of performance, our team here at IFA Magazine will be lifting the lid on the fund.
We’ll be looking at different aspects including updates on how it operates, what the key differences are compared to other ESG funds and why the fund’s managers are optimistic that it is well placed to capitalise on opportunities that the market presents for growth – and growth in income – in coming years.
A special IFA Magazine supplement will be available shortly, providing advisers with a useful summary to assist the investment research process.