After reading some of Scott's articles I have become increasingly interested in BIP. Recently I came across Brookfield Investment Management in a closed-end fund listing INF and on subsequent research found they run a mutual fund version BGLAX (4.75% load) but were not connected to BIP, however, their portfolio manager appears to have left Brookfield Asset Management (advisors to BIP) to join this group. Very confusing but their 7% plus yield caught my attention and as earlier stated they are investing in ports, transmission, toll roads, utilities etc. I wondered if anyone had any comments about this closed-end fund or other infrastructure plays. Thanks
Comments
However, these tax advantages only apply to the direct investments of individuals so that CEF and OEF funds may not pass it through to fund shareholders, but must pay corporate tax inside the CEF or OEF itself. Therefore, I would avoid funds like INF and BGLAX if at all possible and invest directly in MLPs like BIP, which I view as a sort of "closed end fund" itself...just one that holds/invests in tangible infrastructure instead of easily tradable pieces of paper.
I would also not, however, buy BIP at this point in time due to the tremendous run up in which investors have doubled their money in the last two years (just like all other high income generating assets). I put it on my "to buy" list over a year ago and will either wait until the income/yield bubble pops or else never buy it at all...I have two "to buy" lists and BIP is on the "short list" that I review regularly as opposed to the "long list" which contains assets I have sworn to not even reevaluate until 10-15 years from now such as gold.
I've looked at INF, but there's nothing quite like BIP that is almost a public version of a private infrastructure fund (and I believe BIP is an investor in other private infrastructure funds offered by Brookfield - if I remember correctly, that was discussed on the last conference call.) MIC is sorta like BIP, but is structured differently and US-centric.
Additionally, I sold Brookfield Asset Management a few weeks backbut I still own Brookfield Infrastructure. I am looking at WP Carey (WPC) in the REIT space, but really would be a a matter of it coming down. The other REIT I find rather interesting is Retail Opportunity Investments (ROIC), which is a REIT made up entirely of malls with "need-based" anchors (grocery, etc.) As I've said before, I think a lot of retail REITs are going to have to evolve over the next decade to compete with technolgy.
Mall operator Westfield is going to turn one mall into a tech lab to develop new ways to merge tech/mobile and the retail experience - http://www.wired.com/business/2012/10/mall-rats-to-become-guinea-pigs-at-new-retail-lab/
I still like hard/productive assets such as these infrastructure plays, but I've largely gone with separate stocks instead of funds. I own Dynamic Energy Income (DWEIX), which is a mix of US and Canadian (although largely the latter) income-producing energy and/or energy-related stocks.
I own KMR (Kinder Morgan Management), which is a way to invest in Kinder Morgan Partners (an MLP) without the K-1 of the MLP. Enbridge Energy Management (EEQ) is another entity structured in this fashion, as is the new LinnCo, discussed below.
I also own Australian company Graincorp, which is fairly volatile, but an interesting, infrastructure-y (in terms of a good part of their business, not all of it) company that pays a large dividend. Not something I'd recommend for conservative investors, but has paid about a 5% yield and is summarized fairly well by this quote from a Bloomberg article: "With GrainCorp owning the silos where farmers dump their harvests, railroad cars that carry loads to east coast ports, and the elevators used to load ships, the deregulation gave the company a “virtual, natural monopoly” on the eastern seaboard, according to Justin Crosby, a policy director at the Sydney- based NSW Farmers’ Association, which represents 10,000 members, half of them grain growers." Graincorp also owns flour mills, malt operations and now edible oils operations, as well.
Finally, I'd consider adding to KMR, Graincorp and am looking at some other odds and ends, like Canadian royalty co Freehold Royalities and new MLP management co (like KMR, another way to invest in an MLP w/o K-1) LinnCo (which invests in MLP Linn Energy.) I'd also look at Enbridge Income Fund (EBGUF.PK) if that came down.
The one downside for BIP is the k-1, which is irritating; I know people don't mind doing the paperwork, but the K-1s often don't go out until March (and in some cases can show up in April - I had one last year not show up until around 4/10)
We continue to own a 6% position in BIP and have no plans to increase our position in the near future. I am not worried about the recent pullback, as the business model is solid, the distributions are attractive, and BIP's T/A charts still look good. The Q3 report and conference call will be on Nov. 7, 2012.
Also, BIP continues to be poorly correlated with pretty much everything I can throw at it using assetcorrelation.com. Over the last two years, BIP has had correlations of -0.18 to 0.56 with SPY, EFA, VT, VWO, VBINX, DBC, VNQ, BND, BWX, EMB, GII, IGF, EMIF, and PXR. So BIP has served as a diversifier to my other portfolio holdings by the assets they hold and by the behavior of the stock price.
Kevin