Betashares has introduced a new exchange-traded fund (ETF) on the Australian Securities Exchange (ASX), aimed at giving investors exposure to global infrastructure markets. The fund, named the FTSE Global Infrastructure Shares Currency Hedged ETF (ASX: TOLL), debuted at the end of October 2023 and is designed to track an index that includes infrastructure companies from developed nations while being hedged into Australian dollars.
The ETF consists of 135 holdings, with a portfolio allocation that includes 50% in utilities, 30% in transportation companies, and 20% in infrastructure real estate investment trusts (REITs), energy pipelines, and telecommunications. Betashares highlights that these companies provide essential services that are capital-intensive and generally maintain stable demand throughout various economic cycles.
Understanding the Investment Strategy
Infrastructure companies are typically characterized by strong market positions and pricing power, making them reliable components of an investment portfolio. The fund is structured to generate attractive quarterly income, supported by the dividends paid by the companies within its portfolio. As of now, it has reported a 12-month trailing dividend yield of 3.2%.
Geographically, the ETF has its largest exposure in the following markets: United States (59.0%), Canada (10.8%), Australia (6.2%), Spain (5.7%), and Britain (4.2%). The currency-hedging aspect of the fund aims to mitigate the risks associated with fluctuations in foreign currencies against the Australian dollar, allowing investors to gain global infrastructure exposure while minimizing foreign-exchange risk.
Initial Performance and Market Competition
Since its introduction, the ETF has shown an increase of 1.26% in just over a month. This performance suggests it may appeal to investors seeking global infrastructure investments without the complications of currency volatility. Despite the promising start, it is essential to note that there are existing funds on the ASX that may compete directly with Betashares’ latest offering.
Notable competitors include the Vanguard Global Infrastructure Index ETF (ASX: VBLD), which provides exposure to various infrastructure sectors, including transportation and energy, but does not hedge against currency fluctuations. Another alternative is the VanEck FTSE Global Infrastructure (Hedged) ETF (ASX: IFRA), which similarly offers a diversified portfolio of infrastructure securities listed in developed markets worldwide.
Investors considering the Betashares ETF should weigh its potential benefits against the alternatives available on the ASX, particularly in terms of fees, performance, and specific sector exposure. As always, it is advisable to conduct thorough research or consult financial experts before making investment decisions.
