Exploring Attractive Investment Opportunities in 2023: A Closer Look at ASGI and MEGIGeneral Discussion 0 replies 0 likes 0 votes 113 views
While the rising interest rate environment has posed challenges, don't underestimate the potential of these companies to rebound and thrive.
Today, let's delve into two compelling infrastructure Closed-End Funds (CEFs) that have caught my attention. The abrdn Global Infrastructure Income Fund (NYSE: ASGI) and MainStay CBRE Global Infrastructure Megatrends Term Fund (NYSE: MEGI) are trading at significant discounts, offering promising opportunities.
The utility sector, known for its steady dividends, has faced headwinds due to rising interest rates, making it one of the weaker performers in 2023. However, the sector's decline hasn't been overly severe, and there's room for recovery.
ASGI, a global fund with more than 95% equity investments, operates without leverage, providing a safer choice for risk-averse investors. In contrast, MEGI, with 80-95% equity exposure, utilizes leverage to potentially enhance returns. Both funds currently offer reasonable distribution rates.
ASGI's investment objective is to achieve a high level of total return, emphasizing current income. Its strategy involves investing in income-generating infrastructure equity worldwide. It's worth noting that ASGI's exposure to industrial stocks sets it apart within the infrastructure space, though utilities remain a significant part of its holdings.
ASGI's leverage-free approach has made it an attractive option in the current rate environment. Unlike many funds that rely on leverage or options, ASGI employs private investments as a unique strategy. While it carries higher expenses compared to leveraged funds, its stability makes up for it.
MEGI, in contrast, incorporates a thematic approach, focusing on investment megatrends like decarbonization and digital transformation. Leverage, despite its associated risks, could aid MEGI's performance in favorable market conditions. However, its launch coincided with market volatility, affecting its NAV.
While ASGI has pulled ahead since MEGI's launch, it's essential to consider their differing portfolio exposures. ASGI's tilt towards industrial stocks has contributed to its outperformance, given the positive industrial sector performance in 2023. MEGI's megatrend-focused strategy aligns with themes such as decarbonization.
In summary, ASGI and MEGI offer unique opportunities within the utility sector. ASGI's safety-focused, leverage-free approach and MEGI's innovative megatrend strategy both present attractive prospects. Ultimately, investors seeking stability might lean towards ASGI, while those embracing some risk could find potential in MEGI's leverage-enhanced strategy. Always remember, the right investment choice depends on your individual goals and risk tolerance.