Morgan Stanley storms into Asia’s building glut

EXEMPT FUNDS | Morgan Stanley storms into Asia’s building glut

With the saturation of infrastructure funds on the market right now, investor's don't need another hero, so why is Morgan Stanley jumping on board the infrastructure fund bandwagon? Morgan Stanley Co-President James Gorman thinks infrastructure is a vital part of any asset allocation strategy; "this fund offers portfolio diversification and the ability to invest in real assets, with uncorrelated investment returns relative to other asset classes." Further adding to this sentiment, Asian Regional Product Manager of ABN AMRO Nicole Tan further said clients get to participate and capture the growth potential available from this specialised sector. "We hear and see these projects around us happening in Asia, for example the Singapore land and transport infrastructure spending, the Korea Grand Canal project and Chinese railway and roads projects." The $4 billion Morgan Stanley Infrastructure Partners Fund which was launched in Hong Kong during May trails a series of infrastructure funds launched by Invesco, Prudential, RREEF and ING so how does the new fund compare?

The Infrastructure Partners Fund gives investors a long-term source of income and invests in assets which provide public goods or essential services in sectors like transportation, energy and utilities, social infrastructure and communications. Manager of Invesco's Asian Infrastructure Fund Maggie Lee said that her fund in comparison aims for long-term capital growth from investments in a diversified portfolio of Asian securities of issuers which are principally engaged in infrastructure activities, "namely the foundation of basic services, facilities and institutions upon which the growth and development of a community depends including gas, energy, electricity generation, distribution and retailing, water distribution and water treatment." Tan sees some major drawbacks for Morgan Stanley's fund however, "Infrastructure funds like Morgan Stanley's tends to be suited to longer term investment.

On the shorter term, the fund is still subjected to market fluctuations with a tendency for higher volatilities." But, Global Head of Morgan Stanley Infrastructure believes the challenging market conditions are creating "unique opportunities in the infrastructure sector and we are benefiting from our global footprint which is generating a strong investment pipeline in Asia."