Asset manager Miton has launched a new fund estimated to offer an initial yield of 4 per cent. CF Miton Global Infrastructure Income Fund (GB00BD3H9M38) will aim to grow its dividend by 4 to 6 per cent a year by investing in 40 to 50 listed global infrastructure companies. Although a new fund, it will be managed by Jim Wright, who managed the listed infrastructure portfolio within the British Steel Pension Fund for more than 10 years.
The infrastructure sector is in the spotlight due to US President Donald Trump's spending plans and higher expected inflation. Miton's new fund should benefit from those themes: 80 per cent of its investments will be listed in either the US, UK or Europe, and a large number of them generate inflation-linked returns.
Almost half the portfolio will be invested in the utilities sector, with the remainder in sectors delivering a similar risk/return profile, such as telecoms, transport and infrastructure connected to oil and gas pipelines and storage. Those areas have appealed to investors seeking long-term consistent income in recent years due to the long-term nature of projects and inflation-linked yields, which have beaten the low income generated by companies in other sectors. Infrastructure investments have also tended to be less closely correlated with the wider equity market, making them more defensive. The attractive income and more defensive profile some infrastructure funds offer has made them popular, and resulted in closed-end funds of this nature mostly trading at double-digit premiums to net asset value (NAV).