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Global stocks Shares

Domino’s Pizza is taking the next step of growth and has released its FY21 results.

Investment thesis

  • Potential for solid growth in Europe and Japan, with significant opportunities that the Company is well positioned to capitalise on.
  • DMP has a strong position in the market in all of its existing geographies.
  • DMP is ahead of the curve in terms of technology and innovative customer offerings.
  • Merger in Europe to increase top-line revenue.
  • A solid management team.
  • Aiming for higher margins (i.e. operating leverage benefits).

Key Risks

The following are the key challenges to the investment thesis:

  • Acquisition integrations are not proceeding as planned.
  • Failure to meet market expectations for sales and earnings growth.
  • Dietary concerns that compel customers to seek out healthier alternatives
  • Input and labour costs have risen.
  • Competition-related market pressures.
  • Key management personnel have left.
  • The corporate office must increase financial assistance to struggling franchisees.
  • Any additional negative media coverage, particularly regarding underpayment of wages at the franchisee level.
  • Any new concerns about store rollout (such as cannibalisation or demographics not supportive of new stores).
  • Commodity prices have risen as a result of Australia’s ongoing drought.

Highlights of key FY21 results

  • FY22 has begun on a strong footing, with 2,974 stores (including 26 opened this fiscal year) delivering +7.7 percent network sales growth (+2.7 percent on a Same Store basis)… With a two-year cumulative Same Store Sales growth of 13.7 percent, Domino’s is trying to demonstrate sustainable growth by retaining customers from the pandemic’s initial peaks.
  • The 3-5 Year Outlook for New Store Openings has increased to +9-12 percent (up from +7-9 percent),” with management stating that “a review of our modelling has increased our expectations for Benelux (+200 stores) and Japan (+500 stores), and now expects to operate 6,650 stores by 2033.
  • DMP reaffirms its 3-5 year Same Store Sales forecast of +3-6 percent.
  • The 3-5 year net capex outlook has been raised to $100-150 million (up from $60-100 million) as DMP assists franchisees with store expansions.
  • The Board has determined that it will increase its payout ratio from 70% to 80% in recognition of this new phase in Domino’s growth and the expected free cash flow.

Company Description  

Domino’s Pizza Enterprises Limited (DMP) operates retail food outlets. The Company offers franchises to the public and holds the franchise rights for the Domino’s brand and network in Australia, New Zealand, Europe and Japan. 

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

International Still a Drag, but Other Segments Mostly Positive for Scotiabank in Fiscal Q3

. Its domestic operations are more concentrated in mortgages and auto lending. The international exposure gives the bank the potential for higher growth and return opportunities compared with peers, but it also exposes the bank to more risks.

The bank is in the middle of rationalizing its many back-end systems and improving efficiency bankwide.The bank is continuously focusing in digitalisation and has been spending the most on its technology and communication expenses. These efforts will ultimately pay off in the form of improved operating efficiency, customer engagement, and internal sales coordination. This leads us to believe that returns on tangible equity near 15% are sustainable over the longer term for the bank.

International Still a Drag, but Other Segments Mostly Positive for Scotiabank in Fiscal Q3

Bank of Nova Scotia reported decent fiscal third-quarter earnings. Adjusted earnings per share were CAD 2.01, representing solid year-over-year growth which is higher than last quarter’s EPS of CAD 1.90. Provisioning continues to be a major driver of improved earnings. Credit costs remained solid and provisioning was low during the quarter while the bank is still holding excess reserves for future credit losses

Revenue growth continued to be lackluster for Scotiabank, up only 1% year over year as the bank’s international segment remains under some pressure and fee growth for the global markets segment faced tough year over year comps. It is expected that the international fees to continue to recover as the economic picture is improving in essentially all of Scotia bank’s Pacific .

Financial Strength:

Bank of Nova Scotia holds strong overall financial health with net revenue of CAD 30729 million and net income of CAD 6582 million in the year 2020. Nova Scotia’s reported common equity Tier 1 ratio of 12.2% as of July 2021 which remains satisfactory. This is above the 11.5% goal that management has targeted and leaves the bank well positioned to absorb the upcoming rise in credit costs. With dividend payout ratios at manageable levels between 40% and 50%, we expect its capital generation will continue to provide growth in its capital position, leaving room for future bolt-on acquisitions, increased capital return to shareholders, or both

Bulls Say

  • The Canadian market remains attractive; the government has placed barriers to entry that protect high returns.
  • The international segment’s exposure to higher growth emerging markets in Latin America will offset Scotia bank’s slower growth in its home markets and offer a runway for higher growth and returns compared with peers.
  • Scotiabank has consistently been one of the most efficient bankwide operators, and its higher relative level of spending on technology should allow this to continue.

Company Profile

Bank of Nova Scotia is a global financial services provider. The bank has five business segments: Canadian banking, international banking, global wealth management, global banking and markets, and other. It offers a range of advice, products, and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. The bank’s international operations span numerous countries and are more concentrated in Central and South America

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

Traffic is still a problem, but there is more than adequate money to get through another year of hard times.

Investment thesis

  • Recent takeover offers that have been rejected are currently supporting the share price.
  • Sydney International Airport is an appealing asset with a long-term lease, but earnings are currently being impacted by the pandemic.
  • Long-term growth in international tourism and domestic travel is expected post-Covid.
  • Prior to the pandemic, SYD delivered a consistent and growing dividend stream, which is expected to continue post-Covid.
  • New development initiatives (expand capacity & improve passenger experience).
  • Exposure to a falling dollar (cheaper to visit Australia).
  • Earnings can be increased by diversifying into hotels.
  • Potential new markets, such as India and new emerging markets, could drive growth.

Key Risks

The following are the key challenges to the investment thesis:

Bond yields (viewed as a bond proxy, rising bond yields will have a negative impact on SYD’s valuation)

  • A decline in Australian tourism.
  • A global disaster that reduces international travel.
  • Distribution growth, or lack thereof, disappoints.
  • Cost constraints / operational disruptions
  • International airlines are lowering their exposure to Australia.
  • Long-term competition from Western Sydney Airport.

Highlights of key FY21 results

  • Revenue of $341.6 million was -33.2 percent lower than the pcp. SYD had 6.0 million passengers, a -36.4 percent decrease, with domestic and global passenger numbers down by 91.0 percent and -3.1 percent, respectively.
  • Operating expenses were $74.2 million lower, a -7.8 percent decrease.
  • EBITDA was down -29.8 percent to $210.8 million.
  • SYD revealed a $97.4 million loss after income taxes. In terms of Covid-19 impacts, SYD recognised abatements and expected credit loss in the form of $77.0 million in rental abatements and $24.5 million in doubtful debt provision, and government assistance of $2.6 million in JobKeeper payments was recognised as an offset to employee benefits expense up to March 2021.
  • As of 30 June, SYD had a strong balance sheet with $2.9 billion in liquidity ($0.5 billion in available cash and $2.4 billion in undrawn bank debt facilities). On the conference call, management stated that SYD “continues to expect to remain compliant with its covenant requirements.” SYD’s credit rating remained unchanged, at BBB+/Baa1 by S&P/ Moody’s, with a negative outlook. Net debt fell to $7.5 billion from $9.1 billion in the first half of the year, with a cashflow cover ratio of 2.0x (down from 2.4x in the first half of the year) and a nett debt/EBITDA ratio of 14.0x (versus 9.3x at 1H20).

Company Description 

Sydney Airport (SYD) operates the Sydney International Airport (Kingsford Smith). The company develops and maintains the airport infrastructure and leases terminal space to airlines and retailers. The ASX listed stock consists of Sydney Airport Limited (SAL) and Sydney Airport Trust (SAT1). Shares and units in the Group are stapled.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Shares Technology Stocks

Palo Alto’s Product Demand Accelerates in Q4 As Next-Gen Security Soars

Male gamer in headphones holds joystick and playing videogame on console or desktop PC, gaming lifestyle, cybersport. Computer games player in his room with neon light, streamer

its next-generation firewall appliance altering the requirements of this essential piece of networking security. The firm’s portfolio has expanded outside of network security into areas such as cloud protection and automated response. The complexity of an entity’s threat management increases as the quantity of data and traffic being generated off-premises grows. Security point solutions were traditionally purchased to combat the latest threats, and IT teams had to manage various vendors’ products simultaneously, which leads us to believe that IT teams are clamoring for security consolidation to manage disparate solutions. Core to Palo Alto’s technology is its security operating platform, which provides centralized security management. Palo Alto’s concerted efforts into machine learning, analytics, and automated responses could make its products indispensable within customer networks.

Financial Strength 

Palo Alto ended fiscal 2021 with $2.9 billion in cash and cash equivalents and total debt of $3.2 billion in 2023 and 2025 convertible senior notes. The $1.7 billion 2023 notes mature in June 2023 and have a 0.75% fixed interest rate per year paid semiannually, while the $2.0 billion of notes that mature June 2025 have a 0.375% interest rate paid semiannually. The company announced a $1.0 billion share-repurchase authorization in February 2019, which was increased to $1.7 billion the following year with an expiration at the end of 2021, and has subsequently extended the program.

Our fair value estimate for narrow-moat Palo Alto Networks to $440 per share from $400 after its fourth quarter earnings bolstered our confidence in its long-term opportunity within the cybersecurity market. Shares are modestly undervalued, in our view, even after jumping more than 10% following the strong results in the fourth quarter. Palo Alto breezed by our lofty expectations, and previous guidance, for the fourth quarter, with 28% year-over-year revenue growth and adjusted earnings of $1.60. Billings grew by 34% year over year, and remaining performance obligations, or RPO, increased by 36% year over year to $5.9 billion. 

Subscriptions and support increased by more than 36% while product revenue accelerated to 11% growth, both year over year. Its core firewall offerings continue to outpace the market, with 26% year-over-year billings growth and software-based versions represented 47% of firewall billings in the quarter. Next-gen security billings increased by 71% year over year, and now represent 33% of total billings, as the demand for cloud security and automation ramps up in the industry. Next-gen ARR increased by 81% year over year to $1.2 billion. 

Bulls Say’s 

  • Adding on modules to Palo Alto’s security platform could win greenfield opportunities and increase spending from existing customers.
  • Palo Alto could showcase great operating margin leverage as it moves from brand creation into a perennial cybersecurity leader. Winning bids should be less costly as the incumbent, and we think Palo Alto is typically on the short list of potential vendors.
  • The company is segueing into high-growth areas to supplement its firewall leadership. Analytics and machine learning capabilities could separate Palo Alto’s offerings.

Company Profile 

Palo Alto Networks is a pure-play cybersecurity vendor that sells security appliances, subscriptions, and support into enterprises, government entities, and service providers. The company’s product portfolio includes firewall appliances, virtual firewalls, endpoint protection, cloud security, and cybersecurity analytics. The Santa Clara, California, firm was established in 2005 and sells its products worldwide.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

SYD’s share price up by 41.5% over the past year

Investment Thesis:

  • Currently share price is supported by recent takeover offers which have been rejected.
  • Earnings affected by the pandemic; Attractive asset with long-dated lease – Sydney International Airport.
  • Long-term growth is anticipated in international and domestic travel.
  • Solid and high growing dividend stream was offered by SYD before Covid, which is expected to repeat post Covid recovery.
  • Development of new projects (expansion of capacity & improvement of passenger experience). 
  • Leveraged due to a falling dollar (cheaper to visit Australia). 
  • Diversification into hotels for earnings.
  • New markets to drive business growth e.g. India, new emerging markets

Key Risks:

  • Bond rates (which is seen as a bond proxy and rising bonds yields would negatively affect SYD’s valuation) 
  • Slowdown in Australian travel and tourism. 
  • Universal calamity which might lead to downsizing of international travel.
  • Disappointment created by growth distribution and its absence.  
  • Disruptions caused due to cost pressure and operations.
  • Less exposure to Australia by International Airlines. 
  • Long-term competition majorly from Western Sydney Airport. 

Key Highlights:

  • SYD’s share price is $7.70 (+41.5% in comparison to past year); however cannot surpass the price which was at the beginning of pandemic i.e. $8.41.
  • Revenue of $341.6m indicated a sharp decline of -33.2%. The decrease in the rate of passengers of SYD was -36.4%.
  • SYD retained a financially healthy balance sheet with $2.9bn of liquidity as at 30 June.
  • EBITDA of $210.8m was down by -29.8%.
  • Revenue of Aeronautical constitutes 36% amounting to $110.82m, declined -36% or -27.0% on an adjusted basis on lower passenger volumes, down -36.4%.
  • Revenue of Retail (28% of the total revenue) amounts to $87.4m (or $27.5m when adjusted for rental abatements and doubtful debts) declined -40.6% (or -73.4% on an adjusted basis). 
  • Revenue of Property and car rental (27% revenue by segment) of $84.6m (or $83.5m when adjusted for rental abatements and doubtful debts), was down -22.3% (or up +1.1% on an adjusted basis).
  • Revenue of Car parking and ground transport consists of 9% amounting to $28.7m (or $27.8m when adjusted for rental abatements and doubtful debts), which was down -24.7%.

Company Profile:

Sydney Airport Holdings is a publicly–listed Australian holding company which owns a 100% interest in Kingsford Smith Airport via Sydney Airport Corporation. The company is listed on the Australian Stock Exchange and has its head office located in Sydney, New South Wales. The principal activity of the Company is investment in airport assets. The Company’s investment policy is to invest funds in accordance with the provisions of the governing documents of the individual entities within the Company. The Company consists of Sydney Airport Limited (SAL) and Sydney Airport Trust 1 (SAT1). The Trust Company (Sydney Airport) Limited (TCSAL) is the responsible entity of SAT1.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Shares Small Cap

Inghams delivered a strong result in spite of national lockdowns in Australia and NZ

Investment Thesis 

  • The pricing condition is improving.
  • The largest integrated poultry producer in Australia and New Zealand.
  • Additional asset sales are planned.
  • Project Accelerate has proven to be effective in increasing labor productivity and automation, resulting in increased earnings despite lower revenue.
  • Procurement measures are being executed, and the results are meeting expectations.
  • Investing in Australia and New Zealand plants to boost capacity and capabilities across the board.
  • With a healthy balance sheet, capital management measures are high on the agenda.

Key Risks

  • Re-negotiation of important contracts with significant clients on less favourable terms.
  • Increased feed and electricity costs, which could be passed on to customers through market price hikes, lowering competitiveness.
  • Uncertainty arises from the lack of information on the appointment of a new CEO.
  • In QSRs (Quick Service Restaurants) and supermarkets, there is a risk of customer concentration.
  • Exotic disease outbreaks are a risk, limiting ING’s ability to produce poultry goods.
  • From the parent stock provider, there has been a significant decline in volume and quality.
  • Material disruptions in ING’s intricate and interconnected supply chain.

Key FY21 group results 

Despite the impact of Covid-19, ING delivered solid FY21 results that were in line with management’s recent guidance (EBITDA & NPAT) issued on May-21. In comparison to the previous year, group revenue increased by +4.4 percent (with Core Poultry volumes increasing by +4.2 percent, with volume growth in NZ exceedingly strong at +6.3 percent), underlying EBITDA increased by +9.6 percent, and underlying NPAT increased by +57.4 percent. Coverage expansion in wholesale and recovery in the QSR and food service channels drove top-line growth. Total dividends increased +17.9 percent year on year to 16.5cps, representing a payout ratio of 71 percent after earnings growth (in line with policy targets of 60 – 80 percent of underlying NPAT post AASB 16 adjustments). The balance sheet is in excellent shape, with net debt falling by -23.7 percent to $240.2 million in the last year. Group leverage fell from 1.8x to 1.2x, well within management’s 1.0–2.0x target range.

Company Description  

Inghams Group Ltd (ING) is Australia and New Zealand’s largest integrated poultry producer. The Company produces and sells chicken, turkey and stock feed that are used by the poultry, pig, dairy and equine industries. Over one quarantine facility, over ten feed mills, over 74 breeder farms, over 11 hatcheries, over 225 predominantly contracted broiler farms, over seven primary processing plants, over seven further processing plants, over one protein conversion plant, and over nine distribution centres are among the Company’s operations in Australia and New Zealand. Ingham’s and Waitoa are two of the company’s brands.

Source: (BanayanTree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Global stocks Shares

Analysts estimate increase in Stifel Fair Value

Additionally, an initial need for capital in the recession and then low interest rates and a strong stock market led to high capital-raising activity.

Stifel Financial has a long history of being an active acquirer. With several hundred million dollars of arguably excess capital, the company could make some decent-size acquisitions. The company may see some growth from a renewed commitment to its independent advisor business.

Stifel has been deepening its expertise in certain niche areas lately through acquisitions. The KBW merger improved the company’s presence in financial industry investment banking, and Stifel has made a series of public finance firm acquisitions over the past several years. In wealth management, adding Barclays’ advisors can help the firm move more upmarket. The investment banking and wealth management landscape is undergoing a decent amount of change from regulations, such as those related to capital requirements and fiduciary standards.

Financial Strength:

Stifel’s financial health is fairly good. At the end of 2020, the company had approximately $1.1 billion of corporate debt and over $2 billion of cash on its balance sheet. Its next large debt maturity is $500 million in 2024.The Company’s total leverage is less than 8, which is fair considering the mix of its investment banking and traditional banking operations. At the end of 2020, Stifel was at its disclosed target of 11.9% Tier 1 leverage ratio. Given that its Tier 1 leverage ratio is above management’s previously stated target of 10%, the company would resume more material share repurchases or pursue acquisitions. 

Bulls Say:

Stifel’s string of acquisitions has increased operational scale and expertise. Stifel is an experienced acquirer and integrator. A recession could provide ample acquisition opportunities. Net interest income growth over the previous several years at the company’s bank materially expanded wealth management operating margins, and the increased size of the bank and wealth management business provides diversification with its institutional securities business.

Company Profile:

Stifel Financial is a middle-market-focused investment bank that produces more than 90% of its revenue in the United States. Approximately 60% of the company’s net revenue is derived from its global wealth management division, which supports over 2,000 financial advisors, with the remainder coming from its institutional securities business. Stifel has a history of being an active acquirer of other financial service firms.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

Positive effect on Amcor stock as the company’s net income and free cash flow increase

  • Flattering exposure to the growth of both emerging and developed markets.
  • A well-defined strategy for increasing shareholder value.
  • Acquisitions that are bolt-ons provide an opportunity to supplement organic growth.
  • A strong balance sheet.
  • Leveraged against a falling AUD/USD
  • Advantages from the recently finished Bemis acquisition will begin to flow.
  • Capital management initiatives include a $500 million share buyback currently underway.

Key Risks

The following are the key challenges to the investment thesis:

  • Management fails to realise the proposed synergies in the Bemis transaction.
  • Increasing competition causing margin erosion and potential balance-sheet stress (e.g. reduced earnings leading to potential debt covenant breaches).
  • Cost constraints on inputs that the company is unable to pass on to customers (even though the Company does pass through input costs).
  • Global economic growth has slowed.
  • Value-destroying acquisition.
  • The risk of emerging markets.
  • Unfavorable movements in the AUD/USD.

Highlights of key FY21 results

  • EBIT increased by 8% to $1,621 million, with margins enhancing by +60 basis points to 12.6 percent. 
  • GAAP net income of $939 million, a +53 percent increase, translates to GAAP EPS of 60.2 cents, a +58 percent increase (or adjusted EPS of 74.4 cents, a +16 percent increase on a CC basis, above guidance range).
  • Adjusted FCF of $1.1bn, flat -9.9 percent over pcp (albeit at the upper end of guidance range), effected by rising capex on organic growth projects, lower working capital benefit, and adverse tax payment timing compared to pcp.
  • Return on average funds employed of 15.4 percent, an increase of +140 basis points over the pcp. 
  • The Board declared a final dividend of 11.75 cents per share, bringing the full-year dividend to 47 cents per share, and repurchased $350 million (2% ) of outstanding shares.

Company Description 

Amcor Limited (AMC) is an international integrated packaging company offering packing and related services. Amcor primarily produces a wide range of packaging products which include corrugated boxes, cartons, aluminum and steel cans, flexible plastic packaging, PET plastic bottles and jars, and multi-wall sacks. The company has operations in Australasia, North America, Latin America, Europe and Asia.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

Cleanaway’s Asset Acquisition of Suez in F.Y.22

Close-up LED charts and summary info for making stock trading graph

 It is clear about Cleanaway’s growth into materials recovery which features more favorable economics than waste collection. Under its “Footprint 2025” capital allocation strategy, the group will continue to focus investment in materials recovery and waste-to-energy, or WTE. 

Since fiscal 2016, Cleanaway has invested in excess of AUD 100 million in Greenfield materials recovery, waste treatment, and WTE projects. The recent purchase of the materials recovery assets of SKM Recycling represents a further step toward Cleanaway’s goal of moving further into the industry’s midstream.

Further diversifying Cleanaway away from waste collection is the acquisition of Toxfree in late fiscal 2018, skewing Cleanaway’s earnings stream away from collections, the most competitive segment of the waste management value chain.

Financial Strength

Cleanaway has made further progress on its proposed AUD 501 million acquisition of key Australian post-collection assets from Suez, securing new debt facilities which will allow the deal to be fully debt funded. Therefore, balance sheet flexibility post deal completion exists should further acquisition opportunities arise. Cleanaway’s liquidity position is more than ample to secure the business’ operations without external financing through the medium-term. With minimal debt maturities over the fiscal 2021-24 period, Cleanaway’s sources of cash—those being cash at bank, undrawn debt and operating cash flow–are more than sufficient to fund Cleanaway’s ongoing operations. Cleanaway’s earnings exhibit little volatility through the economic cycle. As a result, its conservatively positioned balance sheet provides ample flexibility for further capital allocation to materials recovery and waste disposal assets —whether bolt-on or Greenfield–under Cleanaway’s Footprint 2025 strategy. 

Bull Says

  • Cleanaway is benefiting from industry consolidation.
  • Municipal waste contracts provide relatively stable cash flows through the economic cycle.
  • Capital allocation improved markedly under outgoing CEO Vik Bansal’s guidance.

Company Profile

Cleanaway Waste Management (ASX: CWY) is Australia’s largest waste management business with a national footprint spanning collection, midstream waste processing, treatment and valorization, and downstream waste disposal. Cleanaway is active in municipal and commercial and industrial, or C&I, waste stream segments and in nonhazardous and hazardous liquid waste and medical waste streams following the acquisition of Toxfree in fiscal 2018. While Cleanaway is allocating greater capital to midstream waste processing and treatment, earnings remain skewed toward waste collection. Cleanaway is particularly strong in C&I and municipal waste collection with strong market share in all large Australian metro waste collection markets.

 (Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Funds Funds

A prudent and strong investment strategy that produced absolute returns

Philosophy of the Fund

The Fund’s investment philosophy is based on identifying long-term fundamental value picks that are both listed and unlisted. RARE believes that significant opportunities emerge during economic cycles as markets misprice infrastructure assets in the short term. In the RARE Emerging Markets Strategy, an accumulation index comprised of the FTSE EM Gov Bond Index USD plus 5.0 percent per year is used as a benchmark.

Investment Procedure

The investment team conducts fundamental analysis and valuation in order to identify ‘pure infrastructure’ assets with monopolistic characteristics, long contractual duration, and relatively stable cash flows. In particular, the investments must meet three key requirements:

  • The asset must be a hard-physical asset; 
  • The asset must provide a valuable service to society; and 
  • The asset should have strong foundations in place to ensure equity holders are adequately rewarded.

With these characteristics in mind, RARE uses the ‘RARE EM 150’ as the proprietary investment universe for their Emerging Market Strategy. Included in this list are companies in the MSCI Emerging Markets or Frontier Emerging Markets Index, as well as companies that are listed in other markets but produce a majority of their operating earnings from activities related to emerging markets. Of the 150 securities, 40% of these companies are considered Core and consistently covered, while the remaining 60% are watch listed and updated at least once a year. On a quarterly basis, the composition of the ‘RARE EM 150’ is reviewed by the Investment Leadership Team.

Sector exposure limits are also placed, with a clear preference towards regulated utilities and transport. The Fund notes this is due to their relatively stable performance, and typically lower risk nature in comparison to user-pay assets.

Source: RARE Infrastructure

Fund Positioning 

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.