A subsidiary of Legg Mason has cut performance fees for two of its value funds, after recording negative returns during the COVID-19 crisis.
RARE Infrastructure, a listed infrastructure manager, removed performance fees on its value funds, both hedged and unhedged, on July 1, after they returned -7.2% and -8.2% respectively.
The manager has also reduced its buy/sell spreads on three of its listed infrastructure funds to reduce investor expenses.
The RARE Infrastructure Income and Value - Hedged and Unhedged Funds spreads are now buy 0.12% / sell 0.05% (a reduction of 0.08% and 0.10% respectively). The manager has also reduced the spreads on its RARE Emerging Markets Fund to 0.14% / 0.17%.
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RARE has also introduced new sector designations for both renewables and energy infrastructure.
"These changes are designed to enhance the granularity of reporting and to reflect developments and expected growth within the infrastructure asset class," RARE head of Australian intermediary sales Steve Williams said.
"Importantly, these changes do not impact the way RARE constructs its investable universe or its investment processes."
He argues global infrastructure stocks are the ideal vehicle for portfolio diversification.
"For Australian investors, it is worth noting that global listed infrastructure stocks can provide an attractive source of income in the current environment and have a low correlation to domestic equities and global bonds," Williams said.
"Regulation and long-term contracts generally offer stable cash flow and greater capital stability.
"We continue to believe that this is a time when select listed infrastructure can significantly fortify an individual or SMSF portfolio on the basis that certain infrastructure assets can be shown to offer significant downside protection."
The RARE Infrastructure Value Fund (Unhedged) has returned 2.8%, -8.2%, 4.1% and 5.2% on a one-month, three-month, one-year and three-year basis (as of 31 May 2020). Its hedged counterpart has returned 3.8%, -7.2%, -1.6% and 1.6% for the same time frames. The RARE Emerging Markets Fund has returned -0.6%, -20.2%, -15.2%, and -5.3% for the periods respectively.