Duff & Phelps Global Infrastructure
Duff & Phelps Global Infrastructure
Investment Overview
The Fund seeks attractive capital appreciation and current income by investing globally in owners/operators of essential services companies involved in the communications, utility, transportation, and energy industries. The highly experienced portfolio team applies a disciplined, bottom-up investment process that strives to deliver superior risk-adjusted returns.
Global Infrastructure Investing: Our Approach
Investment Partner
Duff & Phelps Investment Management Co.
Duff & Phelps Investment Management pursues specialized investment strategies with exceptional depth of resources and expertise. Since its earliest beginnings, providing research and analysis of income producing securities to Depression-era investors, the firm's attention has been set on identifying attractive opportunities through active management and fundamental research, while managing the associated risks. Today, building on a distinguished legacy, Duff & Phelps has earned a reputation as a leader in investing in Global Listed Infrastructure, Global Listed Real Estate, Clean Energy, and Diversified Real Assets.
Quality. Reliability. Specialization. Since 1932.
Learn more about Duff & Phelps Investment Management Co.
Investment Professionals
Connie Luecke, CFA
Senior Managing Director, Senior Portfolio Manager
Industry start date: 1983
Start date as fund Portfolio Manager: 2004
Steven Wittwer, CFA
Executive Managing Director, Senior Portfolio Manager
Industry start date: 1997
Start date as fund Portfolio Manager: 2018
Key Features
Attractive Income and Growth Potential
Pursues the relatively high, predictable dividends and solid capital appreciation opportunities that infrastructure companies can offer
Strong Protective Attributes
Focuses on essential services companies that historically have performed well regardless of economic conditions, with long-term contracts or regulatory agreements that provide a potential inflation hedge
Lower Relative Risk Profile
High-conviction portfolio of 40-60 securities emphasizes quality, developed market owner/operators with high-visibility revenues, above-average dividend payouts, and steady cash flow and earnings growth
Top Holdings (% Fund)
| Security | |
|---|---|
| American Tower Corp | |
| NextEra Energy Inc | |
| Dominion Energy Inc | |
| Transurban Group | |
| Aena SME SA | |
| Sempra Energy | |
| Crown Castle International Corp | |
| Cheniere Energy Inc | |
| Public Service Enterprise Group Inc | |
| Enbridge Inc |
Holdings are subject to change.
Characteristics4
(as of 03/31/2022)| Average Weighted Market Cap (billions) | $53.32 |
| Median Market Cap (billions) | $33.40 |
| Trailing P/E Ex-Negative Earnings | 29.11 |
| Price-to-Cash Flow | 16.22 |
| Price-to-Book Value | 3.01 |
| 3-Year EPS Growth Rate | 0.54 |
Sector Allocation (% Equity)
| Multi-Utilities | |
| Electric Utilities | |
| Oil & Gas Storage & Transportation | |
| Railroads | |
| Specialized REITs | |
| Airport Services | |
| Highways & Railtracks | |
| Construction & Engineering | |
| Integrated Telecommunication Services | |
| Gas Utilities | |
| Water Utilities |
Top Countries (% Invested Assets)
(as of 03/31/2022)Growth of $10,000 Investment
From toPerformance
Performance data quoted represents past results. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, so your shares, when redeemed, may be worth more or less than their original cost.
Sales Charge and Expenses
Yields / Distributions1
| 30-day SEC Yield | |
| 30-day SEC Yield (unsubsidized) | |
| Distribution Rate (at NAV) | |
| Income Distributions Current Month | |
| Income Distributions YTD |
Risk Statistics3
(as of )| Fund | Index | |
|---|---|---|
| R2 | ||
| Beta | ||
| Alpha | ||
| Std Dev |
Risk Considerations
Financial Materials
Holdings
Investors should carefully consider the investment objectives, risks, charges and expenses of any Virtus Mutual Fund before investing. The prospectus and summary prospectus contains this and other information about the fund. Please contact your financial representative, call 1-800-243-4361 to obtain a current prospectus and/or summary prospectus. You should read the prospectus and/or summary prospectus carefully before you invest or send money.
Performance data quoted represents past results. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, so your shares, when redeemed, may be worth more or less than their original cost.
Average annual total return is the annual compound return for the indicated period. It reflects the change in share price and the reinvestment of all dividends and capital gains. NAV returns do not include the effect of any applicable sales charges. POP and w/CDSC returns include the effect of maximum applicable sales charges.
Returns for periods of less than one year are cumulative total returns.
1 Yields/Distributions: 30-day SEC Yield is a standardized yield calculated according to a formula set by the SEC, and is subject to change. 30-day SEC Yield (unsubsidized) is the 30-day SEC Yield without the effect of applicable expense waivers. Distribution Rate is calculated by (a) annualizing the latest income distribution for fixed income funds or funds less than 1 year old, or (b) summing all income distributions over the preceding 12 months for all other funds, and dividing the NAV on the last business date of the period, unless otherwise indicated. The Distribution Rate may be comprised of ordinary income, net realized capital gains and returns of capital.
2 Distribution History: Distributions are represented on a cash basis and may be reclassified at year end for tax purposes. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. STCG: Short Term Capital Gain, LTCG: Long Term Capital Gain
3 Risk Statistics: R2 is a statistical measure that represents the percentage of a fund or security's movements that can be explained by movements in a benchmark index. Beta is a quantitative measure of the volatility of a given portfolio to the overall market. Alpha is a risk adjusted measure of an investment's excess return relative to a benchmark. A positive Alpha indicates that the investment produced a return greater than expected for the risk (as measured by Beta) taken. Standard Deviation measures variability of returns around the average return for an investment fund. Higher standard deviation suggests greater risk. Risk Statistics are calculated using 36 monthly returns.
4 Characteristics: For Equity Funds: Avg. Weighted Market Cap (bn): The total dollar market value of all of a company’s outstanding shares; Trailing P/E Ex-Negative Earnings: Per-share stock price divided by the latest 12-months Earnings per Share; Price/Cash Flow: Per-share stock price divided by the per-share operating cash flow; Price/Book: Per-share stock price divided by the latest 12-month per-share Book Value; 3-Year EPS Growth Rate: Average of earnings per share growth for latest 3-year period. The 3-Year EPS Growth Rate is not a forecast of the fund's performance.
4 Characteristics: For Fixed Income Funds: Effective Duration represents the interest rate sensitivity of a fixed income fund. For example, if a fund's effective duration is five years, a 1% increase in interest rates would result in a 5% decline in the fund's price. Similarly, a 1% decline in interest rates would result in a 5% gain in the fund's price.
Morningstar Disclosures:
The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Ratings do not take into account the effects of sales charges and loads.
© Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
1Q22
Market review
The Omicron variant was quickly pushed aside as investors focused on elevated inflation, higher interest rates, and Russia’s military invasion of Ukraine. After several weeks of advance warning, the U.S. Federal Reserve began raising rates in mid-March to curb inflation. Bond yields spiked in response while growth-oriented sectors such as technology declined. Global listed infrastructure stocks (as measured by the FTSE Developed Core Infrastructure 50/50 Index (net)) displayed their defensive characteristics with a 3.66% gain in the quarter, significantly outpacing the broader market.
The energy infrastructure sector was the best performer in the quarter, driven higher by a sharp increase in energy prices. The utility sector rose modestly for the quarter though there was significant dispersion among individual companies. The Russia-Ukraine conflict and corresponding spike in energy prices caused investors to focus on the European Union’s reliance on Russian oil and gas. Transportation stocks posted moderate gains for the quarter as European airports initially performed strongly as the Omicron variant faded and investors began to anticipate a strong summer travel season. However, some of those gains were given back later in the quarter over concerns surrounding the invasion of Ukraine and higher fuel prices. Communications was the worst-performing sector in the quarter. While fundamental business conditions for wireless towers remain quite positive, higher interest rates and a rotation from growth to value took a toll on tower stocks in the period.
Portfolio review
Overall, sector allocation was positive with some offset due to negative stock selection. Sector allocation benefited from an overweight position in midstream energy, partially offset by the negative effect of an overweight position in communications.
At the security level, the largest positive contributors were Cheniere Energy and Sempra Energy. Cheniere operates liquefied natural gas (LNG) facilities and pipelines in Louisiana and Texas. Sempra Energy operates regulated utilities in California and Texas and produces LNG as well. As Europe looks to wean itself from Russian natural gas, U.S.-sourced LNG represents a natural alternative and is expected to see strong demand.
The largest negative contributors were NextEra Energy and American Tower. NextEra Energy, an electric utility and leading provider of renewable energy in North America, traded lower in the quarter as investors shifted from growth into value. In addition, the abrupt retirement of NextEra Energy’s CEO hurt the company’s stock. While the investment case remains intact, the stock’s valuation premium is diminished by the departure of this strong and charismatic leader. American Tower, which owns, operates, and develops wireless communication and broadcast towers throughout the globe, traded lower in the quarter in part due to investors’ concerns around the impact of rising interest rates.
Investment outlook
We believe global infrastructure companies are well positioned in an uncertain macro environment due to the essential nature of their businesses. With respect to inflation, we would highlight that infrastructure companies possess measures of revenue and cash flow protection via inflation-linked contracts and regulatory resets.
Within the communications sector, we continue to be bullish on wireless tower companies. In the U.S., we expect a reacceleration of growth to accommodate wireless usage and deploy new spectrum. In Europe, the independent tower model is accelerating, as more telecommunications carriers are considering selling off their tower portfolios. We expect further M&A in 2022 as the European market follows a roadmap used in the U.S. more than a decade ago.
We maintain an underweight position in the utility sector relative to the benchmark but have a positive bias toward utilities with a focus on the clean-energy transition. Decarbonization of the economy creates a win-win for utilities as they improve their environmental profile while also increasing their earnings. The transition to renewable energy provides a visible ramp of growth that extends for more than a decade. Political initiatives reinforce our positive thesis. Investments from the Next Generation EU recovery funds will hit their stride in 2022 and are focused on the energy transition.
We expect transportation to rebound as COVID-19 restrictions are lifted, but the pace of recovery has been varied within the sector. North American railroads have seen freight volumes nearly recover to pre-pandemic levels. Volume growth should improve over the course of the year, as we expect global supply chain congestion to moderate, supporting more fluid movement of freight volumes. Traffic trends for toll roads have shown improvement and, in some cases, are even surpassing pre-pandemic levels. While there are concerns about the effect of higher gasoline prices on traffic volumes, past periods of elevated prices have had modest short-term impact on toll roads.
Within the transportation sector, airports continue to be the most impacted by the pandemic. Government-imposed travel restrictions related to COVID-19 have slowed the recovery of passenger air travel, particularly business travel. In addition, the Russian invasion of Ukraine has increased the uncertainty surrounding air travel, particularly in Europe.
We have an overweight in midstream energy, a sector that has experienced a sharp rebound as economies around the globe reopen. End market demand has been robust, boosting volume growth, which was also helped by favorable weather conditions in many parts of the world. The supply side is now showing signs of tightness, with the Russian invasion of Ukraine adding to concerns.
Based on our current views of macroeconomic trends, industry drivers, and geopolitical risks, we believe our strategy is appropriately positioned. Our objective is to invest in companies with experienced management teams and predictable business models that are positioned for success beyond the crisis period.