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RISK FACTORS

This is a financial promotion for The First State Global Listed Infrastructure Strategy. This information is for professional clients only in the EEA and elsewhere where lawful. Investing involves certain risks including:

  • The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back significantly less than the original amount invested.
  • Currency Risk: Changes in exchange rates will affect the value of assets which are denominated in other currencies.
  • Single Sector Risk: Investing in a single sector may be riskier than investing in a number of different sectors. Investing in a larger number of sectors helps spread risk.
  • Charges to capital risk: The fees and expenses may be charged against the capital property. Deducting expenses from capital reduces the potential for capital growth.
  • Listed infrastructure risk: Investments in infrastructure may be vulnerable to factors that particularly affect the infrastructure sector, for example natural disasters, operational disruption and national and local environmental laws.

For details of the FCA authorised firms issuing this information and any funds referred to, please see Terms and Conditions and Important Information below.

For a full description of the terms of investment and the risks please see the Prospectus and Key Investor Information Document for each Fund.

If you are in any doubt as to the suitability of our funds for your investment needs, please seek investment advice.

Our Investment
Process

Investment Objective:

We seek to generate excess returns by integrating a rigorous stock selection process with strict portfolio management risk controls.  We combine direct company contact with proprietary research, a consistent valuation framework, a comprehensive 25-point quality assessment and consideration of macroeconomic risks. This approach provides a repeatable structure for building high conviction portfolios, with clear triggers for buy-signals and sell-discipline.

Rather than screening companies on ESG criteria, we seek to understand the risks and capture them in our proprietary quality ranking. ESG analysis is integrated into our investment process through our quality assessment and ranking model. A score is assigned to each criterion; a lower quality score makes it harder for a stock to be included within the overall portfolio. ESG criteria account for 20% of the overall quality score.

Our investment process can be broken down in 7 steps:

  1. Screening
    Securities that have poor infrastructure characteristics, complex corporate structures or a low market capitalisation are screened out in the first step of the process.
  2. Fundamental research
    Valuable insights are sought into each company’s management team, asset quality, financial position, strategic direction, as well as the regulatory environment and overall competitive landscape. This includes a consideration of ESG issues for the firm.
  3. Valuation ranking
    Securities are ranked on consistent valuation measures. We use local currency cash flows and bond rates, with globally consistent equity risk premiums and asset betas.
  4. Quality ranking
    Each company is evaluated on 25 criteria that we believe influence performance. We look at infrastructure characteristics, management, financial position, regulation, sustainability and equity flows.
  5. Security selection
    Valuation and quality ranking results are combined, to determine a security’s overall ranking. This provides us with an indication of the portfolio derived from a purely bottom-up basis.
  6. Macro risk management
    Geopolitical and macroeconomic scenarios are debated and their potential impact on the companies is considered. This enables us to better manage the potential risks in an overall portfolio.
  7. Portfolio construction
    The portfolio is constructed based primarily on the security rankings assigned in step five of the process. The final weighting of each security within the portfolio also reflects expected returns, the degree of the team’s conviction and correlation with other securities in the portfolio. We seek diversification across countries and sectors to manage regulatory and event risk.