The fund’s 3.3% holding in European infrastructure with Macquarie saw a return of 17.4% over the year and has led to the fund making further smaller investments in the asset class through managers Babcock & Brown and Innisfree.
Macquarie’s performance was more than double its benchmark of 7.9%.
Arthur Rakowski, executive director of the Macquarie Group, commented: “Infrastructure is a stable, long-term investment that tends to perform consistently throughout the market cycle and delivers a predictable return. This long-term stability has become more apparent at a time of market volatility in other sectors.”
David Cook, secretary to the Nationwide trustees, confirmed that the total invested in infrastructure now stands at just over £64m.
Brendan Walshe, senior investment consultant at Hewitt Associates, said while infrastructure was a good asset to invest in, it was important to realise that the returns are a result of the underlying assets within investment.
“European infrastructure funds, for example, are EU-denominated, so some of the return is down to the appreciation of the euro against sterling,”
Walshe concluded that infrastructure was not a short-term prospect, and that in most cases long-term cash flows are required and the assets are not easy to substitute. He also advised against falling for the latest fashionable region for infrastructure investment, adding that these were better for private equity investors than institutional ones.
Nationwide’s annual report also revealed that its other best performing fund manager was LaSalle, whose active property mandate saw returns of -7.8% compared with its benchmark of -8.9%.
Elsewhere, Barclays Global Investors saw a negative return of -6.9% on its holding of active UK and global equities, and UBS Global Asset Management saw a -5.6% return on its holding of passive UK and global equities. Both managers were close to their benchmark.
The other significant fund manager, Fidelity, notched up a -0.7% return on active corporate and government bonds.
Charlie Kirby
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WHERE THE FUND INVESTS: Asset classes in which the fund was invested at year-end |
