ESG risk and integration
The analysis of environmental, social and governance (ESG) issues has been an integral part of the investment process since the fund’s launch in October 2017. We believe infrastructure, by virtue of its immovable nature and the impact on wider society, has unique risks and considerations.
We need to ensure that the assets we are investing in are sustainable over the long term so that the businesses are generating sustainable and growing cashflows which ultimately fuel the rising dividends we seek. We do not want our holdings to lose their social license to operate; we do not want them exposed to stranded asset risk. Consequently, coal-fired power and nuclear power exposure are strictly limited on this basis for economic reasons.
While ESG considerations related to infrastructure assets are often associated with negative issues – in particular greenhouse gas emissions from power generation and transport – we are also keen to embrace its positive aspects and its ongoing development to create a more sustainable world.
For example, the infrastructure sector is a key catalyst and facilitator of the energy transition through the deployment of cleaner forms of energy generation, as well as the reduction and/or capture of existing emissions. Through increased use of renewables or transition fuels such as natural gas or developing future fuels such as green hydrogen, we think infrastructure companies can play an important role in journey to a zero-carbon future.
Long-term opportunities in listed infrastructure
We believe the outlook for infrastructure is very promising. In the near term, governments around the world have announced plans to invest in infrastructure to help support the global economy recover from the COVID-19 pandemic. In the US a US$1.2 trillion programme aims to repair, modernise and expand America’s crumbling infrastructure. Meanwhile the European Union has embraced the green agenda and is looking to promote renewable energy and clean transport.
These policies may represent a favourable backdrop for the asset class, but they are not the only reason for our optimism. Listed infrastructure is a beneficiary of long-term structural trends, such as renewable energy, digital connectivity and demographics – powerful themes which we believe will endure for many decades to come.
In this environment, we are extremely optimistic about the long-term opportunities in listed infrastructure.
The value and income from the fund’s assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.
The fund holds a small number of investments, and therefore a fall in the value of a single investment may have a greater impact than if it held a larger number of investments.
The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.
Further details of the risks that apply to the fund can be found in the fund’s Prospectus.
The views expressed in this document should not be taken as a recommendation, advice or forecast.
The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash.
The value of investments will fluctuate, which will cause fund prices to fall as well as rise and investors may not get back the original amount invested.
For financial advisers only. Not for onward distribution. No other persons should rely on any information contained within. This financial promotion is issued by M&G Securities Limited which is authorised and regulated by the Financial Conduct Authority in the UK and provides ISAs and other investment products. The company’s registered office is 10 Fenchurch Avenue, London EC3M 5AG. Registered in England and Wales. Registered Number 90776
About Alex Araujo
Alex Araujo joined M&G’s equity income team in July 2015 and became co-deputy manager of the M&G Global Dividend strategy in April 2016.He has been manager of the M&G Global Listed Infrastructure strategy since it was launched in October 2017, and was appointed manager of the M&G Global Themes strategy in January 2019.
Alex has 25 years of experience in financial markets, having previously worked at UBS and BMO Financial Group. He graduated from the University of Toronto with an MA in economics and is a CFA charterholder.
