Openworld Listed Infra Update Jan2012

7/31/2019 Openworld Listed Infra Update Jan2012

1/4

OpenWorld Lis

Attractive and resilientJanuary 2012

Infrainveesseeconand

A defensive asset class

When economies experience pelisted infrastructure stocks tend theating, cooling and lighting irreother essential infrastructure. Alregulation or long term contracts

(such as utilities and toll roads) tinflation. We believe that dividenhedge against inflation for invest

Attractive income yields

Infrastructure companies tend tothe mature stage of the asset cysustainable over the long term.mature stage assets, with the bu

Chart 1 below shows a comparisopportunities over the last 5-6 yUSD 100 investment (can also bequities and even real estate haand stock market. However, infron the macro cycle (rising less inespecially pertinent in the 2008-flinched. In fact, given the natureinfrastructure companies had littlof bonds).

ed Infrastructure Inve

ividends

tructure assets are long-term, capital inttments that serve the community throug

ntial community services. Good infrastruomic services efficiently, improves the cenerates high productivity for the econo

riods of weakness, unlike many industrial compao be resilient because consumers use water, elepective of economic conditions, drive their carso, the revenues of these companies are usually

. A natural hedge against inflation exists for man

hrough tariff movements or toll increases being ed yields from infrastructure assets should providors.

provide predictable, attractive income distributiole. Due to the earnings certainty of the assets, dur manager will typically have 80% of their strat

lk of the balance in developing, which also pay o

on of the dividends received from comparable aars. We have shown 12 month rolling actual divie seen as a percentage of initial investment). Dive demonstrated a high degree of correlation to tstructure dividends have tended to be less volatithe boom years and falling much less in the bea009 period, where the 12 month rolling dividendof the assets (long-dated, monopoly and stable

e problems in refinancing their debt (both throug

ting

ensivethe provision of

ture provides keympetitiveness of,

y.

nies, the revenues ofctricity and gas for

n toll roads and useunderpinned by

infrastructure assets

xplicitly linked toat least a partial

ns, especially duringistributions are usuallygy invested in the

ut healthy dividends.

set classends received on a

idends from generalhe economic cycleile and less dependentr market). It ispayments hardly

cash flows),loans and issuance


2/4

RUSSELL OPENWORLD

RUSSELL INVESTMENTS

Page 2

Chart 1: Better, resilient and secure dividends, Rolling 12 month yield payments

Source: Bloomberg & MSCI. Data as of end January 2012. The calculations are based on the implied net of tax yield (derivedgeometrically from the difference between the Total Return (Net) and Price versions of the respective indices).

* The rolling 12 month US$ returns are calculated based on a buy-and-hold US$100 investment, as at the end of Dec. 2005.

This makes infrastructure and utility companies more attractive as yield investments. What is importantto note is that companies were paying dividends from their core operations, and not through issuance ofbonds, taking out loans or out of capital. Utilities, which make up anywhere between 45-75% of thestrategy, are more defensive than the transports, and offer more stable dividend payments given theirregulated business model. Having said that, much to most peoples surprise, transports (toll roads,airports, railways and ports) also offer very attractive and secure dividends (see chart 2 below).

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

Rolling12month$return*

S&PGLI F- Rollin g 12 mon th Netdistrib ution ( LHS) MSCI A CWI - Rollin g 12 m on th Netdistrib ution ( LHS)

MSCIWorldUtilities - Rolling 12 monthNet distribution (LHS) FTSEEPRA/NAREITDeveloped - Rolling12 monthNet distribution (LHS)


3/4


4/4

RUSSELL OPENWORLD

RUSSELL INVESTMENTS

Page 4

Table 1:Returning positive returns in declining markets last year, and healthy dividends makes for a

very attractive investment proposition.

Return

2009* 2010 2011

OW GLIF (Gross) 37.6% 13.1% 4.8%

S&P Global Infrastructure Index Net 44.6% 4.8% -1.3%

MSCI World Index Net 42.1% 11.8% -5.5%

*Since inception of the OpenWorld fund (8th April 2009)

Source: Confluence, all returns are in USD

Yield

2009 2010 2011

OW GLIF (Gross)* 4.2% 4.8% 4.6%S&P Global Infrastructure Index* 4.0% 4.1% 4.7%

MSCI World Index Net* 2.6% 2.4% 2.8%

*Market weighted running yield of the underlying holdings as of the end of the yearSource: FactSet, all yields are in USD

For more information: Call: Visit:

+44 207 024 6000 www.openworldinvesting.com

Faisal RahmanPortfolio Manager, Russell Investments

Important InformationApplications for shares in OpenWorld plc ("the Company") are subject to the terms and conditions set out in the Companysprospectus, simplified prospectus, memorandum and articles of association and latest annual and half-yearly reports. Investorsand potential investors are advised to read these documents (and in particular the risk warnings) before making an investment inthe Company. Copies are available free of charge on request from the platform provider and Russell.

This material is for professional use only and is not intended for distribution to retail clients. This material does not constitute anoffer or invitation to anyone in any jurisdiction to invest in any product of Russell Investments Limited (or any of its affiliates)(together "Russell") or use any Russell services in any jurisdiction where such offer or invitation is not lawful, or in which theperson making such offer or invitation is not qualified to do so. Unless otherwise specified, Russell is the source of all data and tothe best of Russells knowledge all information contained in this material is accurate and current at the time of issue,however this cannot be guaranteed.Unless otherwise specified, any opinions expressed are those of Russell and not a statement of fact and they do not constituteinvestment advice and are subject to change.Please note that the value of investment and the income derived from them may go up as well as down and an investor may notreceive back the amount originally invested. The value of a Shareholders investment may be affected favourably or unfavourablyby fluctuations in the rates of different currencies. As investors may be required to pay charges on the issue of Shares, aninvestment in a Fund should be considered to be a medium to long term investment.Openworld Public Limited Company is an umbrella fund with segregated liability between sub-funds and an investment companywith variable capital incorporated under the laws of Ireland pursuant to the European Communities (Undertakings for CollectiveInvestment in Transferable Securities) Regulations, 2003, as amended.Issued by Russell Investments Limited, a company incorporated in England and Wales under registered number 02086230 andwith its registered office at: Rex House, 10 Regent Street, London SW1Y 4PE. Telephone 020 7024 6000.

Authorised and regulated by the FSA, 25 The North Colonnade, Canary Wharf, London E14 5HS.

Documents

Openworld Listed Infra Update Jan2012