Investment Podcast #3 – Infrastructure – Transcript

James Whelan
Hi now and welcome to the Ensombl Investment podcast brought to you by Morningstar. My name is James Whelan, VFS Group investment manager, and I’m here to represent you, the humble advisor doing their best to walk the line between client interests and asset class selection. We are trying to find the things that are not only appropriate, but also the ones that actually work. And maybe try and find the right time to be the right weight for the right clients. So get set, because myself and Morningstar are going to do our best to answer some of the questions that have come up on the ensemble platform. And obviously, all information contained is general in nature. So here we go. It’s always when it’s not there that we noticed it. And the last few years the in the switch to renewables and various government policies, maybe a war or two we’ve noticed a little bit more infrastructure is not only important to a functioning society, but also to a functioning and diversified portfolio changed the linking of segway, whilst in a low rate environment, many areas in the sector played the role of bond proxies, a great term that was coined a few years ago, but now the bonds are actually paying something somewhere, then the beggars can actually now once again be considered choosers on portfolio allocation, but how much and where therein lies the question, so I couldn’t ask for any to better names to help us crawl through the pipes of this question. Again, beautiful pan, then Charles Hamieh co manager of global infrastructure strategies at ClearBridge investments. He’s been there long enough to almost be part of the infrastructure there as well. That’s always a great sign in any fund that I look at. And also, along from Morningstar is Senior Portfolio Manager, Bianca Rose. Bianca, Charles, how are you now?

Charles Hamieh
I am very well. Thanks, James. Thank you.

James Whelan
Alright, now first off, Charles, everyone gets the same question. It’s a good way to set the mood. It’s also a good way to just to talk about what it is you do. What do you do? And how do you make money?

Charles Hamieh
Okay, so as you said, I run or CO manage for listed infrastructure strategies, I ClearBridge investments. And essentially, we are a global fund manager who invests in liquid infrastructure. And if I go back to day one, our philosophy has always been the same. It’s almost to take a private markets approach to assessing value in the sector, but at the same time, never ignoring the realities of what the market does. So use the beta of the market to add a return over and above what a typical infrastructure asset would generate if you were a direct investor. And that was 15 years ago, and certainly the passage of time has has pleasingly proven that a really smart and sensible way to manage money in the sector and generate long term returns for for investors.

James Whelan
She’s that Charles? Bianca. Similar question, maybe not how you make money, but what do you do anyway?

Bianca Rose
So we’re multi asset investors. So we’ll look to invest across all asset classes. And we’ll do that on behalf of retail and institutional clients. So yeah, we start with our capital markets approach where we just looked at the kind of overall universe and then say, okay, based on our value oriented approach, you know, what, you know, are the areas that we want to invest in more, and what do we want to invest in less? And that’s kind of really it in a nutshell for us.

James Whelan
Perfect. And that works out? Well. So by the end of this podcast, we can answer the what you would think would be simple questions, why, where how much, and when, with regards to infrastructure and various relations to it, I think that we’ve probably achieved it, and Clayton can pay me some money. Now. Let’s get to because that’s what I’m here for the talking points. Now. I’ve got advisor questions that come off the platform from Ensembl. And any advisors out there, if you’re on the platform, ask more questions, we’re going to have more conversations like this. And that’s what the platform is for just trying to get your questions into the into the mouths of people like me, and then again, into the answers of people like my guests today. So let’s start really simply, what is an infrastructure investment? And what are some examples? I’m gonna go, I’m gonna go left to right yoga.

Bianca Rose
Yeah, sure. So we just say it as essential systems that you need to you know, have a well functioning society if you like. So they usually essential services, like you know, your typical utility that kind of, you know, provides your gas, electricity, you name it, water, and also, you know, stuff like airports, toll roads, basically transportation, infrastructure, those kind of the major areas that we think of

James Whelan
the characteristics of infrastructure investments that make them attractive to investors, this is really easy. We started with the easy ones, it’s a good way to just get why you need what I’m gonna do with you.

Charles Hamieh
Well, I was gonna say they’re an essential service, and because of that, they have quite low latitude to economics, economic outcomes. So you get very high resilience of cash flows, you know, whether we’re in a recession or not, people still typically use water gas electricity, and they’ll still even drive a toll roads and you know, take flights etc. And once you get that really resilient cashflow, it does allow these companies to pay dividends and dividends which dividend growth, which is linked more to asset base growth. So dividends which can grow much faster than a typical through the cycle inflation rate. And that’s sort of the the, you know, the main the main reasons and the outcome of that is really strong portfolio diversification and asset class, which, in really volatile markets has the ability to preserve capital. So really strong downside protection, any rising markets can capture the probe amount of upside as well. So it’s quite unique to infrastructure.

James Whelan
I remember one of the one of the beautiful dawning moments of my young broking career would be back in 2005, when I was a young whippersnapper deal as assistant assistant, and I heard an advisor saying, it was the most simple the most simple argument that he made about investing in a toll road, which is that as the toll goes up, they charge people more less people will use it, theoretically, it’s a little bit of elasticity and that less people will use it or which that actually make it quicker to drive on. So then more people will go back and use it. And it’s effectively just a never ending rotation through there. And I’m not entirely sure if that theory works, but it’s very similar to sort of

Charles Hamieh
I’ve been well, he has worked a lot of tours around the waters. And that’s why toll roads such great investments through the cycle definitely.

James Whelan
Now as a diversifier, the anchor, I’m looking at the oldest one. So where do you see the benefits of of utilizing infrastructure at a portfolio from a diversification perspective?

Bianca Rose
Yeah, so I think it definitely complements growth assets that tend to be more about capital growth. And this does tend to be more about that income profile, it will vary across the infrastructure, you know, types, but generally, we do see this as suitable for people who are focused on income. Also looking for as, as you kind of noted, Charles, you know, that kind of, you know, through the cycle, economic downturns and so on, utilities, in particular, within the infrastructure space tend to be more stable in terms of their earnings profile.

James Whelan
Yep. Okay. So now I’m going to have to talk about the I word inflation. Now, we’re not going to have a view on inflation, because everyone’s had a view, and everyone’s been different. Congratulations to all players, it is higher, it does seem like the perspective is that it is going to be higher for a little bit longer than make potentially what people thought that it was going to be doing. It’s a tough slog to get it from six down to two. Does that, Charles, I’m gonna go to you, how has it changed? The the ease at which an infrastructure investment has has made it with inflation? First of all, how does inflation and infrastructure connect together? And then I’m going to avoid jumping ahead? And then how do we how do we get to the next part?

Charles Hamieh
So again, one of the really unique features of the asset class, whether it’s a user pays asset, like a toll road, or an airport, or utility, is that there is mechanisms enshrined in regulation or concession agreements that allow the owner of the asset to pass through inflation. And that’s sort of been one of the real attractiveness, attractive characteristics of the asset class, it’s inception, but certainly countable for the last couple of years. And that’s really a function of a couple of things, you know, one is how they generate revenue, you know, the contractual or regulated environment, they do so. And the second is the market structure. So typically, they’re oligopoly or monopoly assets. So they should be regulated, and they should sort of earn a return for investing their asset bases. And finally, you do have an again, as I said earlier, an asset class where the revenue is, you know, is very resilient, again, which lends itself to being able to pass through pass through inflation, and retain that sort of that, that that free cash flow. And, you know, when you pull those together, it really came to a fall last year. And as you said, silly, allview, somewhat similar in terms of just that last mile, inflation probably would be more difficult for central banks and governments to, to moderate. So having inflation protection is probably still a very attractive thing to have in the context of a portfolio

James Whelan
card tonight, but we’ve so at the top, I didn’t mention that beautiful phrase, which I say that I coined that until the show that I did that inflation, higher inflation has led to, to higher bond yields, yes, better alternatives with therefore the need for the bond proxy that that a lot of infrastructure investments were challenged me on this place, that the bond proxies, that infrastructure was seen as potentially means it can be a bit maybe not picky, but it’s a bit difficult, a bit more difficult to find the alternative that’s going to yield higher at a similar risk area. I’m going to leave I’m gonna leave

Charles Hamieh
that’s on the bond proxy statement. It’s similar to inflation, you know, interest rates a pass through me allowed return. So at any point in the cycle, when a regulators working out the allowed return amongst other parts of regulation, you know, the lack of return is a pretty accurate representation of the prevailing cost of capital and cost of equity. So, in a higher history environments, the lab return will also be higher to reflect that so you do get an inflation passer of each trait as well. And the bond proxy with a bit of growth I mean, if you think About the asset base growth that we’re seeing now, across many of our utilities, you know, it’s almost double digits. So these are essential services. So water assets, gas assets, electricity assets, in sometimes very mature networks still growing their asset bases by up to 10%. And that’s not, you know, a bond proxy, that sort of company paying your three or 4% dividend yield, but growing at 10% a year. So there is a huge amount of growth, structural growth as well, we’d have to touch upon that a bit later. So I always push back on the bond proxy, because I’d love to bond that was growing its dividend at 10% a year as well.

James Whelan
That’s so there’s so a bond proxy in yield, but not growth, I suppose is most definitely yeah, that’s it. Bianca, similar question for you with with regards to how you see that fitting into the portfolio with a higher with higher risk free rate, I’m going to say risk free rate. So high risk backed by the US Navy, effectively the 10 year bond, the with a higher risk free rate, where do you see the pickiness that you can have inside internally in an infrastructure investment?

Bianca Rose
Yeah, so I mean, I guess we think about, yeah, the interaction between inflation, interest rates, and also economic conditions. So you know, we spoke briefly about transportation infrastructure, I think that’s, you know, one that with economic conditions, the traffic volumes, and so on can change. Whereas the utility is a little bit more less variable is kind of, you know, and we can get to this topic later part of that transition to, you know, the, you know, the New Energy, kind of what is our new energy source? Got it, I’ve got a whole section. Yeah, so, and, you know, utilities will have to be part of that solution, the only thing I will say is on that return on investment, it does depend on the regulatory kind of environment. So in Europe, for instance, it’s probably not as favorable as the US, I think the US in terms of earning that rate of return is much easier to kind of get by the various regulators in the different, let’s call it you know, councils, municipalities in within the US, but in Europe, politically. Within Europe, we do find that this is kind of where the politics or the regulatory environment comes in. And what you tend to find is that more the Southern European guys who have, you know, I guess, debt issues and so on, tend to pick on the utilities a little bit and don’t let them earn those rates of return. So it does mean, you do also need to pick and choose where you are,

James Whelan
okay? And do you want to just get straight into the whilst we’re here, let’s just go straight into the transition to renewables. And then we can come back to it since we’re both sort of keyed up or sorted, we’re all sort of keyed up on the idea. And you mentioned Europe before, and sort of listening to the situation that Europe’s in now, particularly, maybe some of the regulatory issues that you’ve got, you’ve got Germany that’s winding down, its nuclear, you’ve got Spain, which is quite sunny, and therefore favorable for solar panels, you’ve got a Germany that was looking at potentially replacing this nuclear wind down with gas from Russia, which is now not really as much of a possibility for various reasons, in that the European situation and their transition to renewables has been maybe stickier than they would have liked it ideally. What do you see now, let’s not talk about the specifics of Europe. But let’s talk about generally speaking, I just like that as an example of just going it’s not an easy flip the switch?

Bianca Rose
No, it’s definitely not. And I mean, I’ll let you comment more, Charles, obviously. But, you know, we know that we’re going to have to change in the future in terms of energy resources, and where we kind of source them from the question is, for the utilities, guys, particularly in Europe, as well, we’re seeing the energy guys get into that space as well, in terms of renewable, so there is a bit of competition of who does what, yeah. From a capital supply perspective. And, and the world is changing, because, you know, as you mentioned, nuclear I think, you know, what we saw with Japan many years ago with the, you know, the plant issues there with the earthquakes and so on. So, I think it’s sort of something that governments are kind of always trying to think, what’s the solution? And then they might change sometimes course.

James Whelan
So that very diplomatic amusement, yeah. So.

Bianca Rose
So it will for utilities, which are very long dated assets, where you have to make a commitment upfront, and you’re looking at quite a long time, that’s really problematic. So so there’s a lot of good things on the horizon. But there’s also some challenges on the horizon.

James Whelan
Any any key challenges and opportunities? I’m gonna I’m gonna open this up and just bounce back and forth between all of us on this one of the challenges and opportunities on the transition to renewables from an infrastructure investments space,

Charles Hamieh
I think we will all underestimate the opportunity. And history shows that as it relates to infrastructure spend, we always underestimate just how much money is required. This opportunity is immense, but we’ll be spending potentially trillions and trillions of dollars to get any way ie net zero. That question is who’s going to pay for it? So in the affordability equation, and what framework is best to ensure that There’s more of a socialization of the cost. And that’s sort of the the work in progress, I think, less so in North America, probably more so in Europe, as Bianca said. But that said, I don’t really think and we don’t really think that those universe challenges will outweigh the opportunity, when you think about, you know, decarbonisation Net Zero, changing the way energy is generated, changing the way it moves around society don’t change the way we move around society at almost every point, and infrastructure investment is required. So utilities, and even user bases, like toll roads, and airports, are really right at the forefront of, of that push or their transition. So there’s going to be significant opportunities across every utility, both listed and direct, to take advantage of that, and to invest in very high quality assets and, and very attractive returns in the process. Quite often, those returns just as part of asset base and owning an allowed return. But the path won’t be linear. And there’s going to be risks along the way. That’s our job as active managers to navigate that and the company’s jobs to navigate that, but certainly, from our point of view, whilst the challenges are real, the opportunities are absolutely immense. Yeah, that’s the more exciting part of the equation,

James Whelan
I have been a big focus. Sorry, I’ve had a big focus of for the last few. last few years, I suppose on the on the wealth transfer, and the transition that we’re going to have, the portfolio of our grandparents with regards to an infrastructure position is going to look a lot different to now. What will our grandchildren? I mean, generally speaking, you’re not gonna know specifics, only 15% or anything like that, what’s the portfolio probably going to look like in 20 years time or 30 years time? Is it because you’re gonna be is it going to be something that’s in maybe carbon capture, that we’re going to see, as we as we move towards that zero and actually started to shoot back into the earth?

Charles Hamieh
A lot of I think what’s most interesting to me is that a lot of the people are really sort of understand this, but a lot of technology innovation that’s occurring now, within infrastructure is occurring within utilities themselves. If you think about hydrogen, think about carbon capture a lot of technology right at the forefront. So the missing links required to achieve net zero. It’s the large scale utilities in North America, in Europe, in Asia, you know, which are committing the necessary r&d And the capex, sort of drive that forward. So we don’t really see an environment where it’d be too different in terms of large utilities, airports, toll roads, etc. Because at the end of the day, as the point was made, really, they’re essential services, you know, imagine a society with no infrastructure, there’ll be too few of those countries in my, you know, traveling emerging markets. So the role of infrastructure won’t change how you navigate around that wall at the edges. But certainly, you know, I think we’re, it’s quite pleasing to see just how committed the utilities are, globally, to being right at the forefront of their pioneering technology designed or needed to get anywhere near net zero by 2050. Well,

James Whelan
Bianca, now I know you’ve got a background in ESG. Please note here, because the research that I did did have ESG links to your name a few times. So based on what Charles has just said, then if you’ve got if you’ve got the Utes, the sort of utilities doing the job of the future? Where does Where does an infrastructure or holding sit on an industry spectrum?

Bianca Rose
Yeah. So it’s a really good question. It’s the path is what I’m going to say because some of them are not there today, but they may well be. And, and just on that, I mean, as well, we’re talking a lot about utilities, but it also affects the airports and the toll roads, in terms of, you know, when we think of the airports, they also have to come up with solutions for the airlines. So this is kind of an issue for them, because they’re kind of main customer is very high carbon, you know, a meeting. So it isn’t just an issue that’s confined to utilities being part of the solution. It’s also about transportation infrastructure. So the minute we move, and we need to move, we’re social beings, but minute we do. We’re emitting carbon. So we’ve got to, you know, we’ve got to think about our sources as well for transportation infrastructure. So so the way we kind of see it is there’s probably going to be I mean, you mentioned hydrogen, Charles, like there’s going to be transitions in different kinds of sources, if you like and where the end result is going to be. It’s really hard to say in 20 years time,

James Whelan
okay. Okay. Is there anything else that’s in that transition to renewables area that you wanted to touch on? Because that was all the questions that I had on that? Is there anything that’s further on that?

Charles Hamieh
No, no, not not to touch on but again, I want to reiterate just how exciting when opportunities certainly never companies in our universe and utilities and insurance companies more generally arrive at the forefront of what their transition

James Whelan
Okay? And we’re going to switch back now to economic cycles. What we’re seeing this is just a simple factual sort of question on this from one of our advisors, does infrastructure perform differently in different economic cycles? And under different governments?

Bianca Rose
Definitely, I mean, I mentioned Europe, in terms of government. So you can basically

James Whelan
be, please be specific on on those as well, like, what sort of what sort of what sort of campaigning, you’d like to see what sort of groundswell of or movement and then sort of potentially maybe some of the opportunities, Charles that you’d look for, in, say, a region or a sector that is moving in a certain direction, that’d be a fantastic way of being able to fit these things together.

Bianca Rose
Yeah, so I mentioned positioning, specifically in Europe, the southern states, so Italy, Spain, because they tend to be more indebted, they need the infrastructure, but they’re just not prepared to, I guess, put on the cost, if you like. And so a lot of these utilities companies end up doing these investments for the greater good of society, but don’t necessarily get the return from that. In the US, it is a different situation, where they generally tend to be more successful in terms of working with them, like regulatory bodies and various governments to get the required rate of return that is required to make these investments. But it does, you know, it just depends. And likewise, for the European airports, sometimes they come across issues as well, with the governments and so on. So say that these are just some of the challenges.

James Whelan
Charles, what would a manager be looking for? Maybe not specifically, but you know, just obviously, you

Charles Hamieh
need some stability in that public policy outcome. And that regular, you know, that sort of the regulatory framework over multiple cycles, whether it’s utility or an airport, and certainly in southern Europe, there’s been some challenges. But again, from our point of view, those challenges have not have not sort of impacted the opportunity. Certainly opportunity, we’re seeing Italy, with, you know, a few companies there, even in Spain, to a lesser extent, there is still significant opportunity. And as with every investment is understanding, you know, how you price the risk, in a sense, sort of stepping back and reflecting on the range of outcomes around sort of a base case valuation. And a lot of those regulatory issues, certainly, as it relates to maybe electricity networks in Spain, you consider it in your range of outcomes. And so when building a portfolio, you know, if there’s a wider range of outcomes, then you may temper your enthusiasm to go to a, you know, a higher weight. But that’s what you do when you build portfolios. So, you know, a job of active management is to understand the risk and price the risk, and try to make money trading when the markets are wrong, and hopefully, the market moves to our direction. So certainly, whilst you know, there is sort of, on occasion, you know, very sort, of course, to temper enthusiasm for some assets in Europe, the US is different, as you said, like, it’s like a nominal ROA, it’s state based regulation, there’s a huge competition for capital in North America. And so, you know, normal error rates have been stubbornly high now, for a long, long, long period of time. Whereas in Europe, it’s much more it will, it is sort of a real base system of regulation, where you do get passed through of inflation and interest rates, so allowed returns with a very low, you know, extreme environment would be much lower, even when you sort of try to make them like the like. So that’s, again, all part of the Matuson frozen investing.

Bianca Rose
And you mentioned economic conditions. So when we think of transportation infrastructure, that’s definitely you know, something that will ebb and flow with economic cycles, probably, you know, more so than utilities. So if you’re going to go traveling, say, for, for holiday travel, and so on, that’s probably going to be cut back business travel is going to be cut back, you won’t be spending as much in you know, when you think of the airports, half of their revenue is usually from retail. So it’s kind of like retail property, in a way, it’s kind of not just infrastructure. So you’ll probably spend less than that, you know, kind of malls and shops and so on in the airport. So we kind of tend to have regard to transportation infrastructure is usually the more economically sensitive part of infrastructure, save versus utilities, okay, so

James Whelan
anyone who can piece together how that works, that’s your job. And that’s, that’s where we can do economic cycle and where that’s going to fit into next one that I’ve got is one of the narratives we sometimes hear about infrastructure is around the lack of transparency and liquidity. Now, Charles, I know that you’ve got an answer for this. Is this issue real?

Charles Hamieh
Well, I suppose in the listed market, no, of the share prices, you see what you see what’s the ultimate source of truth, rice, the collective wisdom of 1000s of people who buy and sell their stock. In the direct market, it’s probably a bit different, where you have yearly valuations. And, you know, certainly their independence, and you couldn’t challenge that. But, you know, what we’ve seen in the listed market for some time now is quite a large gap between many of the transaction multiples In direct infrastructure, and trading multiples in listed companies been much lower. And they’re the same asset quite often. Sometimes even the same regulator, and sometimes even very similar capital structures. So just justifying that gap, I think is becoming harder and harder. So it doesn’t surprise me that you’ve had a bit more regulatory noise in Australia in particular, recently about the value that a lot of these direct assets are being held on the balance sheet or within the investment funds of industry funds, for example. And that’s across both infrastructure and property and a bunch of

James Whelan
alien property now, I think is directly coming up on those ones. Yeah,

Charles Hamieh
the passage of time, we’ll we’ll, you know, we’ll play that out. But what what we’ve seen is that at least two companies have benefited, because when you do have a very large valuation gap, you know, three things can really happen. You no one is a direct investor, or just by the listed company. And he saw that a couple of years ago, Sydney Airport spark infrastructure was near and you see it globally. What it also allowed more recently, is many listed companies to sell non core assets to direct investors. I mean, they take those proceeds and reinvest in a very high quality core businesses. But thirdly, probably most importantly, if you’re ambiguous to how, or these few if you’re sort of ambivalent to how you want to get exposure to the sector, then as a listed investor, you know, right now, buying a listed vehicle or listed stock, sorry, you probably will earn a higher return through the cycle. And that’s purely because of a low entry price. So, you know, the, what we see with the rec market does have quite positive, you know, read throughs in terms of valuation for the illicit market?

James Whelan
Well, that answers your answers. For me, now, we’re going to come to the last two questions, then I’ll have to call it at this one. Bianca does does it this is a just reading the questions here? Does it have a role in all portfolios? Or is it more suited to a specific category of investor?

Bianca Rose
So we have it in our multi asset portfolios, and we always have, you know, an allocation, but it varies. Yeah, different times at the moment, we have a lower exposure to it. Just because we feel that, yes, we take the point about, you know, where it sits versus unlisted, you know, kind of valuations. And we do monitor the unlisted valuations and in the infrastructure space, but we just feel that there is probably better opportunities for us elsewhere at the moment. For our more income portfolios that we have, like, say, offshore within our group, we’ll have more infrastructure, because we kind of see that as having more of that role for the income focused investor, just like real estate, which you mentioned before. So that’s probably another area that you know, income focused investors, you know, dry, but we do kind of look at it against, I guess, bonds and so on. Yeah, evaluate there.

James Whelan
And I’ll close it off now. And then I’ll call last bids. I always do give everyone a last chance to speak how and how can infrastructure be accessed from an investment perspective for other other one now, not talking specific book. But

Bianca Rose
I mean, I think we talked about unlisted versus listed. I mean, I think it comes down to as well the size of the investor, I think, for smaller investors definitely listed, you know, and, and, as noted, we do see a valuation gap, I think where the large investors are attracted to direct infrastructure or going unlisted is because they’ve just got so much money that they have to go and buy a big asset themselves. And also, they’re looking for control of the asset, because, quite frankly, quite a few years ago, during GFC, a number of the large investors were in unlisted funds, and couldn’t get out. So now they are looking to own the assets themselves so that they can hopefully sell the stakes themselves, you have more control. So I think it just depends on what they’re looking

James Whelan
for. It does come down to that liquidity and the cost of liquidity being paid to not be liquid as well as does enter into that conversation as well.

Charles Hamieh
Yeah, it does. I mean, surprisingly, globally. It’s, you know, the role of listed infrastructure relative to directors really changed. So increasingly, listed infrastructure now is taking their core role of infrastructure, because it’s very hard. I made the point when I go about having huge about raising huge amounts of money and direct trying to invest it, they’ve had no luck in investing, there’s still three or $400 billion US dollars of dry powder, sitting in direct, you know, waiting to be called to be invested. So they had no luck because the high quality assets, the core assets are no longer available, really, they’re all listed. So increasingly, global managers are using less infrastructure to sort of satisfy that core part of their portfolio and then complement it with you know, direct

James Whelan
exposure, trying to find some stuff on the sides. Yeah, and quite often Add to it. Yeah, unless

Charles Hamieh
you’re very, very big, you know, you have no control. Even as a direct investor, it’s very rare that you’re oversize, where you can buy control,

Bianca Rose
you’re typically usually co owning with someone. So,

Charles Hamieh
again, we always say that enlisted, you know that a lot of those reasons to buy direct are a bit overstated. And certainly the passage of time has definitely shown that through a cycle that the risk return outcomes in being listed or direct are very very similar. And the return outcomes elicit a slightly higher because active management listed does allow you to take advantage of the mark gives you in terms of a beta and add another layer another layer of return over and above just buying and holding an asset and waiting for someone to buy it off you attendees time.

James Whelan
Perfect. Well, I think that we’ve managed to answer a few of the questions here the why where how much when also talking about infrastructure from a lower volatility, stable cash flow, potentially, inflation protection viewpoint and also from a liquidity viewpoint as well. Have we touched on all of these things last bids for anyone to speak now forever hold your peace.

Charles Hamieh
I will say James so what we have seen is, you know, in Australia, perhaps maybe a more temperate wait more recently of infrastructure across portfolios, diversified portfolios, globally, the absolute opposite. So we’re right in the CUSP now of globally in particular, you know, people now increasing their wait infrastructure quite aggressively, and sort of playing a role as a diversifier with downside protection and upside capture. And then sort of piecing a portfolio around that sort of, perhaps where Australia was not long ago, but certainly globally. That’s where they are now.

James Whelan
Well, thank you very much for joining us. My name is Ben. My name is My name is Jill James, we Linda has been for the duration of this podcast, the focus group investment manager, and I would like to thank my guests. He is senior portfolio manager at Morningstar, Bianca rose, and CO manager of global infrastructure strategies at ClearBridge investments. Charles Haley, thank you so much. Thank you. Cheers. If you want any more information, please go to the ensemble platform, ask more questions, various websites and links to this podcast as well. Thank you so much for joining us.