Investment in Your Life

Legg Mason RARE Infrastructure Value Fund

With Demand, Comes More Opportunities

As the population increases, the demand for infrastructure grow.

Growing in Population Size

The current world population of 7.6 billion is expected to reach 9.8 billion in 2050.

Source: United Nations. The World Population Prospects (2017) dated 21 June 2017.

Emerging Markets:Urbanisation and Population Growth

In 2014, there were 28 megacities. As emerging market economies expand, it is estimated to increase to 41 megacities by 2030.

In the near future, 70% of the world population will live in cities.

Source: United Nations. The World Population Prospects (2017) dated 21 June 2017 and World Urbanization Prospectus (2014). https://esa.un.org/unpd/wup/Maps/ © 2018 United Nations, DESA, Population Division. Licensed under Creative Commons license CC BY 3.0 IGO

Potential Problems in the Future

As population grows, the current infrastructure will become insufficient and the infrastructure gap widens.

Water Scarcity

Water Scarcity

By 2050, some 4.8 to 5.7 billion people could be living in water-scarce areas.1

Electricity Demand

Electricity Demand

Electricity is the rising force among worldwide end-uses of energy, making up 40% of the rise in final consumption to 2040 – the same share of growth that oil took for the last twenty-five years.2

Bandwidth Shortage

Bandwidth Shortage

The 5G usage in the U.S. reached 1.5 trillion in 2017, and the demand is growing at rapid pace.3

Transportation

Transportation

Currently up to 72% of drivers in the U.S. suffer from traffic congestion and the congestion could only get worse.4

Source:
  1. Organization for Economic Co-operation and Development (OECD) and United Nations World Water Development Report (2018 edition), as of 31 March 2018
  2. World Energy Outlook 2017 by International Energy Agency, as of November 2017
  3. CTIA, Race to 5G Report, as of April 2018.
  4. International Bridge, Tunnel and Highway Association (IBTTA) 2015 Report on Tolling in the United States.

Potential in Infrastructure Investment

Infrastructure Assets Provide Essential Services to Society

Increasing populaton and needs drive infrastructure development.

World energy consumption looks to increase by 28% by 2040.1

Some US$1.2-1.5 trillion(TN) is expected to be spent on global airport infrastructure development up to 2030.2

Source:
  1. US Energy Information Administration (EIA), International Energy Outlook Executive Summary, September 2017.
  2. International Air Transport Association (IATA), 31 March 2017.


Expected Growth of Infrastructure Assets

Assets set to grow by 124% and exceed USD 110 trillion(TN) by 2030.

Developed Economy assets expected to almost double from USD 27 trillion to over USD 50 trillion.

Developing Economy assets expected to almost triple from USD 22 trillion to over USD 60 trillion.

Private sector tipped to play a larger role in funding, expecting up to USD 44 trillion by 2030.

Energy and transportation sectors expected to drive the growth in infrastructure assets.

Source: David Hale Global Economics (2014) and RARE.

What is Global Listed Infrastructure

Infrastructure companies are different from other business.

Industry with Relatively Stable Operation

Broadly, infrastructure can be categorised into two key buckets: regulated assets and user-pays assets.

Government Regulated Assets

Government Regulated Assets
(Income-Focused)

They are highly related to basic essential needs, often regulated by governments. Thus, the revenues are relatively stable in economic cycles.

User-pays Assets

User-pays Assets
(Growth-oriented)

With user-pays assets, a company’s revenue is dependent on how many people use their assets. Therefore as an economy grows, develops and prospers, these assets also typically grow.

Source: Legg Mason

Good Hedge for Inflation

The government allows an infrastructure company to earn reasonable revenues on their assets, in order to maintain the function of the national infrastructure, and thus the prices are usually adjustable and linked to inflation.

Electricity Prices and Inflation Rises
Source: Sorted by Legg Mason, 10 years from 2008 to 2017.
  1. Eurostat, 31 May 2018
  2. Standard electricity prices in England and Wales, provided by the British government, dated 29 March 2018.
  3. Bloomberg, by 31 December 2017.

Relatively Higher Dividend Yields

Resilient Cash Flows

Infrastructure is the physical assets that provide an essential service to society. As in the case of user-pay assets, it often comes with resilient cash flows, and thus infrastructure companies are more likely to distribute higher and stable dividends.

Estimated Growth of the Top Seven Secto
Historical Dividend payout of Infrastructure companies

Source: Bloomberg, dated 7 June 2018. The past performances do not guarantee the future outcomes. Dividend yields do not stand for the return rate of funds. The index is based on Standard & Poor’s.

Growing Allocation to Infrastructure

In 12 to 24 months, up to 70% of Foreign Institutional Investors plan to increase their investment allocation to infrastructure, and the amount may increase up to USD 130 billion in total.

Source: “Real Momentum: Global Public Investors and The Real Assets Market” Report (by BNY Mellon Global Public Investors, 2018 https://Bnymellon.com/GlobalPublicInvestors)。The above information is included for illustrative purposes only and does not constitute specific investment advice or recommendations on any particular securities.

Features of Legg Mason RARE Infrastructure Value Fund

Flexibility to manage risk and return through market cycles.

Multiple Share Class Options

Monthly Distributing and Accumulating share classes; as well as multiple currencies share classes.

Benchmark-unaware flexibility

OECD G7 Inflation Index +5.5%2

Specialised Focus

Infrastructure assets are maintained by social-economic needs and related services. RARE focuses exclusively on global listed infrastructure. These are publicly traded infrastructure securities, and the characteristics of the infrastructure asset class which includes: long-term stable cash flows, and inflation protection while enjoying the added benefits of listed markets such as liquidity and lower fees. The portfolio will own about 30-60 listed infrastructure securities.1

Deep Expertise

RARE's investment team are first and foremost infrastructure specialists with unique experience across the infrastructure asset lifecycle. The team has worked for infrastructure corporations, and their breadth of experience and knowledge is a key differentiating factor as compared to competitors.

Source: Legg Mason.
  1. These are internal limits/guidelines and are subject to change.
  2. The benchmark of the Legg Mason RARE Infrastructure Value Fund is the Organization for Economic Cooperation and Development (OECD) G7 Consumer Price Index (“OECD G7 CPI”) plus 5.5% per annum (the ‘Index’). The OECD publishes the data for the OECD G7 CPI on a 3-4 month lag basis.

Strategy Committee of RARE

Richard Elmslie

37
Industry experience

Richard Elmslie

Co-Founder, Co-Chief Executive and Co-Chief Investment Officer

Nick Langley

24
Industry experience

Nick Langley

Co-Founder, Co-Chief Executive and Co-Chief Investment Officer

Charles Hamieh

22
Industry experience

Charles Hamieh

Senior Investment Analyst and Portfolio Manager

Shane Hurst

20
Industry experience

Shane Hurst

Senior Investment Analyst and Portfolio Manager

Source: RARE, as of 31 December 2018.

Product Overview

Infrastructure and our daily life are highly correlated, and here is what you should know about the fund.

Legg Mason RARE Infrastructure Value Fund

Source: Legg Mason, as of .
  1. The benchmark of the Legg Mason RARE Infrastructure Value Fund is the Organization for Economic Cooperation and Development (OECD) G7 Consumer Price Index (“OECD G7 CPI”) plus 5.5% per annum (the ‘Index’). The OECD publishes the data for the OECD G7 CPI on a 3-4 month lag basis.
  2. Source: BNY Mellon. Based on Class A Distr. (M) SGD Hedged Plus share classes as of ex-date . Annualised Dividend Rate = (Dividend per Unit / Fund NAV as of Ex-Date) x (365 / Days in distribution period) x 100%. Dividend rate is not indicative of fund performance. Past dividend rate is not indicative of future dividend rate. Net asset value of the funds may be volatile subject to market factors. Distributing Plus share classes may pay dividend out of capital. The payment of dividends out of capital effectively amounts to a return or withdrawal of an investor’s original capital investment or of capital gains attributable to that original investment. Such distribution will result in a corresponding immediate decrease in the Net Asset Value of these share classes.

Legg Mason RARE Infrastructure Value Fund

Source: Legg Mason, . Portfolio characteristics may change without notice.

CLASS A DISTRIBUTING (M)
Ex Date USD
(HEDGED) PLUS
SGD
(HEDGED) PLUS
EURO
PLUS

Source: BNY Mellon, as of . Annualised dividend rate = (Dividend per Unit / Fund NAV as of Ex-Date) x (365 Days / Days in distribution period) x 100%. Dividend rate is not indicative of fund performance. A positive dividend yield does not imply a positive return. Past dividend rate is not indicative of future dividend rate. Net asset value of the funds may be volatile subject to market factors. Distributing Plus share classes may pay dividend out of capital. The payment of dividends out of capital effectively amounts to a return or withdrawal of an investor’s original capital investment or of capital gains attributable to that original investment. Such distribution will result in a corresponding immediate decrease in the Net Asset Value of these share classes

Sales Contacts

Legg Mason Asset Management

Singapore Pte. Limited

1 George Street #23-02 Singapore 049145
Funds Hotline: +65 6536 8000
Fax: +65 6317 8947
Email: LMSGSALES@leggmason.com

Important Information

The Legg Mason RARE Infrastructure Value Fund may invest in certain types of derivatives for investment and/ or efficient portfolio management purposes.

Please refer to the prospectus for more information. Distributing Plus share classes may pay dividend out of capital. The payment of dividends out of capital effectively amounts to a return or withdrawal of an investor´s original capital investment or of capital gains attributable to that original investment. Such distribution will result in a corresponding immediate decrease in the Net AssetValue of these share classes.

This document, provided by Legg Mason Asset Management Singapore Pte. Limited ( “Legg Mason” ) (Registration Number (UEN): 200007942R), is for information only and does not constitute an offer or solicitation to buy or sell any units in any fund.

The prospectus of the fund is available and may be obtained from Legg Mason or its authorised distributors. Investors should check with Legg Mason or its authorised distributors on whether a particular class of the fund is available for subscription. Investors should read the prospectus prior to any subscription. All applications for units in the fund must be made on the application forms accompanying the prospectus. Past performance is not necessarily indicative of future performance. All investments involve risk, including possible loss of principal. The value of the units in the fund and the income accruing to the units, if any, may fall or rise.

Distribution of this document may be restricted in certain jurisdictions. Any persons coming into possession of this document should seek advice for details of, and observe, such restrictions (if any).This document does not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution or offer is not authorized or to any person to whom it is unlawful to distribute such a document or make such an offer or solicitation. This fund is not available to US citizens, residents or greencard holders and may not be available in all jurisdictions.

Neither Legg Mason nor any officer or employee of Legg Mason accepts any liability whatsoever for any loss arising from any use of this document or its contents. The information in this document is confidential and proprietary and may not be used other than by the intended user.This document may not be reproduced, distributed or published without prior written permission from Legg Mason.

The mention of any individual securities / funds should neither constitute nor be construed as a recommendation to purchase or sell securities, and the information provided regarding such individual securities / funds is not a sufficient basis upon which to make an investment decision. Portfolio allocations, holdings and characteristics are subject to change at any time. Although information has been obtained from sources that Legg Mason believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. Legg Mason, its affiliates, officers or directors, may have an interest in the acquisition or disposal of the securities mentioned herein.

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