November 29, 2016 / 12:21 AM / a year ago

Australia fund manager IFM keen on Trump's infrastructure policy - CEO

SYDNEY, Nov 29 (Reuters) - Australian fund manager IFM Investors is bullish on investing in the United States following the election of Donald Trump to U.S. president, seeing strong potential returns from financing infrastructure assets, its chief executive said on Tuesday.

“If Trump pursues his policies around infrastructure, it would mean enormous opportunities for us,” IFM Investors CEO Brett Himbury said in an interview.

Trump has proposed generous tax credits for companies that build and operate infrastructure projects that earn a fee, such as toll roads.

IFM, which is one Australia’s largest fund managers, has A$74 billion of assets under management with around three-quarters in infrastructure.

The asset management company was part of a consortium last month that bought Australia’s biggest electricity grid for $12.5 billion.

While Himbury said IFM was more than likely to expand its infrastructure assets next year, he also highlighted growth in the fund’s listed equities and unlisted debt portfolios.

“We are now investing A$1 billion in infrastructure debt per year and we could easily double it,” he said, seeing a sweet spot for single-A rated assets in U.S. and Australian dollars, particularly in the energy sector.

IFM is also increasingly looking at European debt in both primary and secondary markets due to attractive returns of 200 basis points to 400 basis points over Libor.

Himbury also sees value in “enhanced passive” management of share securities amid falling interest rates and a cut-throat fee environment.

“Enhanced passive is a very cost effective way to deliver returns,” he said.

Enhanced passive investment is a hybrid strategy that typically tracks an index or portfolio but adds a modest degree of management, as opposed to active management that tries to beat the market by frequently selling or buying securities.

Around A$25 billion of IFM’s funds is in corporate and infrastructure debt and cash, with A$2 billion in private equity and A$15 billion in listed equities. The balance of A$32 billion is in unlisted infrastructure equities. (Reporting by Cecile Lefort; Editing by Eric Meijer)

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