Standout product for super funds
It is hard to go past the AMP Capital Core Infrastructure Fund's 11.3% a year return over the past five years. In a low-yield investment climate, it is a standout.
The fund gives self-managed super funds direct access to assets usually available only to large institutions. About half of the investments are in direct infrastructure such as Melbourne Airport, Australian schools and Angel Trains in the UK. The other half is in listed infrastructure shares that provide liquidity. The minimum investment is $10,000 and the recommended time frame is at least five years.
With term deposit rates low and sharemarkets weak, alternative investments such as infrastructure are being rolled out to investors. Investment managers like to describe infrastructure as a "defensive" asset because it can deliver regular cash flows through economic cycles. And infrastructure isn't necessarily correlated with sharemarkets.
The fund is available through AMP's SMSF Suite. It delivers investors both capital growth and a cash yield (6.6%pa of the 11.3%pa earned over five years). During the same period, comparing the fund with the S&P/ASX 200 Accumulation Index, the AMP fund delivered 162% of the return of Australian equities with only 40% of the volatility.
AMP's SMSF Suite, launched in May 2014, also includes the Wholesale Australian Property Fund, Corporate Bond Fund, Global Infrastructure Securities Fund and Dynamic Markets Fund.
It is always hard for investors to know if an investment manager has paid too much for the assets. The fund's performance of 11.3%pa over five years lags the MSCI Australian quarterly unlisted infrastructure index of 13.9%pa over five years but AMP does not use this as a benchmark. Also watch out for the fees. The investment management fee is 1.5% plus 15% of the fund's performance above its benchmark, which is the 10-year Australian government bond yield plus 3.25%.