Tyler Rosenlicht has seen a lot of airports.
And the Cohen & Steers head of natural resource equities reckons terminals in Australia and NZ offer a more pleasurable experience for travellers than most in his home country of the US.
In NZ last week at the tail-end of an eight-day Australasian tour, Rosenlicht said the difference in airport quality reflects the fact that the majority of US airports remain in local government hands.
“NZ and Australia have been early adopters in listing transportation assets,” he said.
Auckland Airport, for example, is one of the almost 60 stocks in the Cohen & Steers global listed infrastructure portfolio, offered in NZ as a portfolio investment entity (PIE) by Salt Funds Management.
The Auckland holding represents more than 1.2 per cent of the Cohen & Steers fund in a slight country overweight versus the index even as the strategy is below benchmarks on airports in general.
But the specialist real assets firm takes an active approach to managing global listed infrastructure in what Rosenlicht said remains an “inefficient market” amid growing investor interest.
He said the annual portfolio turnover typically ranges between 50-100 per cent with about 60 per cent of stocks with “structural tailwinds” held for at least three years, 30 per cent on a one-year timeframe and 10 per cent of short-term plays to take advantage of “tactical mispricing” in the market.
Since inception in 2004, the Cohen & Steers global listed infrastructure fund – one of the early entrants in a then nascent asset class – has returned almost 7.7 per cent annualised net of fees compared to the benchmark FTSE Global Core Infrastructure 50/50 Index.
Launched as a PIE in August 2021, the Salt version of the strategy has seen an average annual return of more than 7 per cent versus the index 4.8 per cent (both in NZ dollar terms).
The asset class also offers a less volatile ride than broader equities that has been one of the features increasingly attractive to many investors, according to Rosenlicht.
He said the demand for listed infrastructure is “well-founded” amid an increasingly turbulent global macro backdrop.
Rosenlicht told Australasian investors that a scenario of “slower-than-expected growth and greater-than-expected inflation” was one of three main reasons supporting the infrastructure story now.
“With the global economy shifting into a lower gear and amid a more-dovish environment for interest rates, infrastructure’s appeal is compelling,” he said in a presentation.
The asset class is also trading at discount of 13 per cent relative to global equities, well below the average 10 per cent premium with respective valuations of 11.7-times and 13.4-times earnings.
Furthermore, Rosenlicht said the flood of institutional money into unlisted infrastructure provides opportunities for investors in listed counterparts.
“Demand for assets has overwhelmed the private market’s ability to deploy capital, potentially providing a rising floor of support for listed infrastructure valuations, as private funds are acquiring assets at significant premiums over prices prior to acquisition,” he said.
While infrastructure assets move in and out of stock markets – Sydney Airport, for instance, was taken private, delisting from the ASX in 2022 – Rosenlicht said the current scenario represents a “big arbitrage opportunity” for managers focusing on listed companies.
Overall, he said Cohen & Steers is upbeat about opportunities across all of the thematic infrastructure sub-sectors it has dubbed the ‘four Ds’: digitalisation; decarbonisation; debt; and, deglobalisation.
For example, deglobalisation should be “positive for ports”, Rosenlicht said, but not all of them.
“Tariffs could create risks for certain ports while presenting opportunities for others,” he told NZ investors before flying home.