Global Infrastructure

Ever thought of investing in essential services?

Supporting you every minute of every day

Ever thought of investing in essential services?

Infrastructure and utility stocks have been around a long time – the oldest listed utility, Consolidated Edison of the US, traces its listing to 1824. Yet it wasn’t until the 1990s that the asset class became a viable option for everyday investors.

More than 350 infrastructure and utility companies are listed on global stock markets, representing a market cap in excess of US$4 trillion; about three times the market value of the Australian stock market*. There are sound reasons why people should include these stocks in a diversified portfolio. They might be surprised just how much infrastructure and utility companies support their daily lives.

Infrastructure, by general definition, refers to large, fixed long-term assets that deliver essential services.
While utilities, highways and pipelines are commonly regarded as infrastructure, there is no agreement on whether or not data centres, car parks and other such assets form part of this universe. Irrespective of the murkiness of defining infrastructure, the case for the asset class can be made by looking at the attributes of infrastructure companies (where the term from now on covers infrastructure and utility companies).


Infrastructure is a distinctive asset class in three ways:

    The vast majority of infrastructure assets typically face constant demand, limited competition and a stable regulatory environment. Infrastructure is thus well positioned to generate reliable cash flows and solid and stable earnings growth, no matter what economic conditions prevail.
    Infrastructure comes with natural or built-in protection against inflation because regulators allow these companies to raise their prices to protect their earnings when their costs rise.
    Assets that have reliable earnings growth and stable income streams are typically havens – sources of stability – in times of market declines.

Including infrastructure in a diversified portfolio can enhance returns and reduce portfolio risk.


Our investment approach for infrastructure and utilities is founded on two principal objectives: to achieve attractive risk-adjusted returns over the medium to long term and to reduce the risk of permanent capital loss. As a result, we are an absolute-return focused manager that aims to invest in companies at prices that deliver attractive risk-adjusted returns over a three-to five-year period.


Where our strategy is different is that we apply a stricter definition to what qualifies as infrastructure and a utility. We believe that a key reason why people invest in infrastructure and utilities is that they are seeking the reliable returns that are associated with the asset class. To achieve this objective, we limit our investment universe to stocks that provide investors with predictable, through-the-economic-cycle, inflation-linked returns. This means we exclude stocks whose earnings are sensitive to competition, sovereign risk and changes in commodity prices. 

The stocks we consider for the strategy are mainly drawn from two sectors:

  1. Regulated utilities, which includes energy and water utilities. We estimate that utilities comprise about 60% of the potential investment universe for the strategy. Utilities are typically regulated by a government-sponsored entity. Such regulation requires the utility to provide an essential service while efficiently allowing the utility to earn a fair rate of return on the capital it has invested. 
  2. Infrastructure, which includes airports, ports, railroads, toll roads, communications assets and energy infrastructure (oil and gas pipelines).

Our infrastructure team consists of eight investment professionals headed by Gerald Stack. The team manages A$17 billion* for large and small investors based around the world. Key team members:

Gerald Stack
Gerald joined Magellan in 2007 and is Head of Investments and leads the team responsible for managing Magellan’s infrastructure portfolios. Gerald has more than 25 years of infrastructure investment experience.

Ofer Karliner
Ofer joined Magellan’s Infrastructure Team in 2016 and was promoted to Portfolio Manager in 2017. Ofer has more than 20 years  of infrastructure investment experience.

Ben McVicar
Ben joined Magellan’s Infrastructure Team in 2013 and was promoted to Portfolio Manager in 2017. Ben has more than 10 years of investment experience.


Our infrastructure strategy seeks to provide efficient access to the stable returns offered by the infrastructure asset class while protecting capital in adverse markets. The strategy typically holds between 20 and 40 infrastructure and utility stocks.

To learn more on how to access our Infrastructure funds, go to
Magellan Infrastructure Fund
Magellan Infrastructure Fund (Unhedged)
Magellan Infrastructure Fund (Currency Hedged) (Managed Fund) (ASX:MICH)

* As at 31 March 2018.
^ Cisco VNI: Global Mobile Data Traffic Forecast Update, 2016-2021 (March 2017).
1 IATA. ‘IATA lifts 2017 profit view on higher demand: 5 solid picks.’ 6 June 2017.
2 Central Intelligence Agency. The World Factbook. ‘Field listing: Airports’. Numbers are for 2013.
3 Morgan Stanley Research. ‘Global telecommunications. Hidden value in tower portfolios.’ 19 July 2016. Page 9.
4 The Australian Water Industry. ‘Water industry fact sheet’.
5 Australian Bureau of Statistics. ‘Australians paying more for less water.’ Media release. 29 November 2015.
6 ‘20 interesting and useful water facts.’
7 Australian Pipelines & Gas Association. ‘Facts and figures.’
8 British Gas. ‘11 amazing and surprising facts about energy.’
9 US Department of Transportation. ‘Freight rail overview.’
10 Association of American Railroads. ‘Ever wonder what fits in one rail car?’ Undated.
11 The National Academies Press. ‘Electricity transmission and distribution.’
12 US Energy Information Administration. ‘2015 average monthly bill – residential.’
13 IBTTA. ‘Debunking the myths of highway tolling.’ Figures are for 2011.
14 Transurban, Roads & Maritime Services

Important Information: This material has been produced by Magellan Asset Management Limited trading as MFG Asset Management (‘MFG Asset Management’) and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation. This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should read and consider any relevant offer documentation applicable to any investment product or service and consider obtaining professional investment advice tailored to your specific circumstances before making any investment decision.

This material may include data, research and other information from third party sources. MFG Asset Management makes no guarantee that such information is accurate, complete or timely and does not provide any warranties regarding results obtained from its use. Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of MFG Asset Management. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon.
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