Brookfield Global Listed Infrastructure Income Fund: Potential for Diversified Protection in Volatile Markets

Friday, Nov 30 2018 by


Brookfield Global Listed Infrastructure Income Fund: Potential for Diversified Protection in Volatile Markets

Stock investors have experienced rising volatility levels since the summer, and this has generated new rounds of analysis which suggests that equities markets have become overvalued.  This is particularly true in the technology sector, where companies like Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Facebook (NASDAQ:FB) have witnessed substantial declines after posting all-time highs earlier in the year.  Global trade tensions and the prospect of tighter interest rate policy at the Federal Reserve have weighed on stocks, and reversed many of the gains posted earlier this year.

Ultimately, this means long-term investors must adopt proactive strategies in order to more effectively manage their positions.  Closed-end funds may offer some interesting opportunities in these types of environments because they often trade at substantial discounts relative to net asset value.  One name which is currently trading at attractive valuations relative to its historical averages, is Brookfield Global Listed Infrastructure Income Fund (NYSE:INF).

Dividend Investments

The Brookfield Global Listed Infrastructure Income Fund is a well-diversified instrument with assets allocated across major sectors within the global listed infrastructure universe.  The Fund seeks to provide a high level of total return, with an emphasis on income, typically investing at least 80% of its net assets in publicly traded equity securities of infrastructure companies.  

As of September 30, 2018, Master Limited Partnerships (MLPs) currently represent the largest sector for the Fund and Utilities currently make up the majority of the Fund at 21.2%, followed by Toll Roads (15.4%), Pipelines (13.1%), Renewables/Electric Generation (12.2%), Electricity Transmission & Distribution (10.4%), Communications (7.3%), Midstream (7.0%), Airports (4.6%), Water (4.3%) and Gas Utilities (2.8%).  This high level of asset diversification may help investors ensure greater protection from potential market declines in any individual industry.

Dividend Investments

Further evidence of potential protective diversification can be found in the Fund’s regional exposure as of September 30, 2018.  A majority of the holdings in the Brookfield Global Listed Infrastructure Income Fund are centered in the United States (at 56.7%).  Companies in developed European nations are second in defining the Fund’s regional exposure (at 17.2%).

Finally, companies in Canada (9.5%), the United Kingdom (7.4%), Asia Pacific (6.9%), and Latin America (1.0%) comprise the remainder.  For conservative investors, this added regional diversification remains critically important given the potentially disruptive nature of global trade tensions in the current market environment.

Dividend Investments

Drivers of growth within the Fund can be found in its individual stock holdings, which combine to create a potentially sound portfolio for investors.  As of September 30, 2018, concessions and construction company Vinci SA (OTCMKTS:VCISY) represented its largest holding (at 5.6% of the Fund). Communications company, American Tower Corp. (NYSE:AMT) was the Fund’s second-largest holding (at 5.3%), followed by Energy Transfer Partners LP at 5.1%.

Dividend Investments

As of November 30, 2018,  Brookfield Global Listed Infrastructure Income Fund was trading at a 17.1% discount relative to its net asset value ($13.51).  This is a valuation discount which has not been seen since April 2018. In the chart above, we can see that the last time INF traded near its 52-week lows, the Fund quickly reversed its prior declines to post sharp rallies of 15.72% (to reach the August 9th highs of $12.96 per share).

Dividend Investments

From a longer-term perspective, we can actually see that the Fund has not traded at NAV discounts this deep since 2016.  On a YTD basis, the Brookfield Global Listed Infrastructure Income Fund is trading below its average NAV discount (13.71%).  This is another factor which suggests the Fund may be in a position to produce gains for investors heading into the final months of the year.

Dividend Investments

In this chart, we can see that the Brookfield Global Listed Infrastructure Income Fund is also trading at a significant discount relative to its category averages.  These trends have been relatively stark since 2017, and this suggests that INF is one of the most undervalued Fund offerings which can be found within the sector.  Based on the September 30, 2018, market price, Brookfield Global Listed Infrastructure Income Fund reflected a total distribution rate of 8.16%.  For investors, this may create potential for income as the Fund’s distribution level is currently far higher than the 1.91% dividend yield which is typically associated with the S&P 500 averages.

All combined, the Brookfield Global Listed Infrastructure Income Fund offers potential for well-diversified protection for investors in during volatile markets.  The Fund provides elevated distribution levels and broad exposure to the global industrial listed universe which provides added security in the event that any specific geographical region or industry group experiences bearish declines.

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Brookfield Global Listed Infrastructure Income Fund Inc. (the Fund) is a non-diversified, closed-end management investment company. The Fund's investment objective is to provide a high level of total return, with an emphasis on income. The Fund seeks to achieve its investment objective by investing primarily in securities of publicly traded infrastructure companies. The Fund's invests in various sectors, such as pipelines, electric utilities and generation, midstream, telecommunications, toll roads, water, electricity transmission and distribution, airports, gas utilities, communications and other. The Funds geographical portfolio includes the United States, Italy, the United Kingdom, Spain, Australia, France, Switzerland, New Zealand, Brazil, Germany and Mexico. The Fund's advisor is Brookfield Investment Management Inc. (BIM). more »

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3 Posts on this Thread show/hide all

millen 30th Nov '18 1 of 3

Thank you. That's an interesting idea for one in need of greater global and sectoral diversity. It would seem a reliable, quasi-utility filter in times of uncertainty - trade wars, rising interest rates 'peak US', Brexit.....

But why this fund out of the raft of lookalikes? Eg for UK investors something like ISHRS GLOBAL INFR UCITS USD DIST ETF (LON:IDIN) might seem more comfortable, seems less volatile and a better return, at least in 2018. Is it primarily the discount? If so, what's the reason for the discount and what should trigger a narrowing? Does it actually pay a dividend? What's the expense ratio? Can you explain what these MLPs are? Are they credit or equity, quoted or not? Potential extra charges? Is there any gearing within the fund?

Back to the sector fundamentals, I wonder if some of the investees are subject to regulatory controls/risk - perhaps less so in US/Canada than Europe? Toll roads perhaps have heightened risk following the Genoa collapse - maybe big bills for precautionary remedial works? I'm surprised there's not more in emerging markets.

Sorry for the raft of questions, but your post has fired me up to investigate further.

PS A pet gripe. What gets my goat is articles that have clear tables and charts, followed by paragraphs that repeat the figures but using words. What's the point? (Likewise news articles that show an image of a tweet, then quote it verbatim in the text below!)

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jonesj 1st Dec '18 2 of 3

The above post almost reads like it's written by a house broker for the purposes of marketing. There is no consideration of the advantages & disadvantages of this fund OR comparison with alternative funds/investment trusts.
There is no comparison with any relevant benchmark and the performance data is for one year only, which is definitely not a good way to select funds/trusts.
There is quite a reasonable discount to NAV for something with fashionable words like "Infrastructure" and "Income" in the title. However, without comparison with other options this is meaningless.

In some cases, I have found the Investment Trusts on the largest discount have had dreadful performance over the long term. No idea what applies in this case.

I believe the way to select funds or investment trusts is to look at long term performance, possibly on a site like Morningstar.     The efficient market advocates might say this is also no good, but it seems to be working for me.

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