Investment Approach

The Fund was established to take advantage of the expertise of Macquarie Group as Macquarie Capital Investment Management LLC, a global leader in the listed infrastructure sector, will act as the portfolio manager (the “Portfolio Manager”) of the Fund.

The Fund will invest in listed emerging markets infrastructure securities issued by entities that own, operate or provide infrastructure assets or services. These are emerging market domiciled entities that earn a substantial amount of their revenue or profits from owning, operating or providing infrastructure assets or services. Infrastructure assets are essential to emerging market economies because they provide the domestic population with the basic services for both social and economic development. Infrastructure assets typically provide essential services, such as fresh water, sanitation, roads, airports, utilities, power, communications, hospitals, schools and other social services. These assets provide exposure to the underlying economic growth of emerging markets. The Portfolio Manager believes such assets may exhibit a reduced business risk in comparison to some other sectors due to the more predictable cash flows of infrastructure assets.

The Portfolio Manager expects domestic demand to be a dominant driver of growth due to demographics trends and continued urbanization. By its very nature, the demand for infrastructure is driven by domestic demand. Infrastructure may be one of the main beneficiaries of growth in domestic demand as governments modernize and expand infrastructure to support this growth. The Portfolio Manager believes that compared to a general emerging markets strategy, a portfolio of emerging markets infrastructure equities is ideally placed to benefit from the transition towards domestically focused growth in emerging markets. Historically, emerging markets infrastructure has provided higher returns and higher volatility compared to global infrastructure but lower volatility compared to emerging markets equities.

The Portfolio Manager believes there are three significant long-term growth drivers of companies that own, operate and/or are associated with the development of infrastructure assets in emerging markets.

1. Economic growth: Sustainable economic growth over the long term requires investment in new infrastructure and the maintenance of existing infrastructure assets. The Portfolio Manager therefore believes that the desire for economic growth in emerging markets is likely to spur infrastructure investments.

2. Rising population and urban migration: A growing population and urban migration place pressure on existing infrastructure and create demand for increased investment, particularly in basic services, such as power, water and sanitation. Domestic demand is expected to be a dominant driver of growth.

3. Greater focus on competitiveness: Quality of infrastructure is an important factor impacting a country’s competitiveness. The Portfolio Manager therefore believes higher government and private sector investment in infrastructure is required for any emerging economy to remain competitive and attract foreign direct investment.