Cohen and Steers Infrastructure Fund (NYSE:UTF) is selling at an attractive discount to NAV and is an attractive way to invest in global infrastructure companies- utilities, pipelines, toll roads, railroads, airports, ports etc. The fund is well diversified and owns 150 securities. A managed quarterly distribution of $0.24 a share has been paid over the last year equivalent to about a 6% distribution yield. The distributions have included $0.032 return of capital.
On January 1, 2010, UTF changed its name from “Cohen and Steers Select Utility Fund” to “Cohen and Steers Infrastructure Fund”, at the same time changing its mandate to invest at least 80% of its managed assets in securities issued by infrastructure companies and its benchmark to the UBS Global 50/50 Infrastructure and Utilities Index.
The fund uses leverage to enhance its yield. Leverage represents about 37% of managed assets. It has access to variable rate debt of 1.3%, but then uses interest rate swap transactions to convert part of this into fixed rate debt. They have locked in 41% of their borrowings at an average fixed rate of 3.4% for three more years. Locking in a significant portion of the Fund’s leverage cost protects the dividend paying ability of the fund and offers some protection from future increases in short term interest rates.
Here are some recent stats on MTS:
Cohen and Steers Infrastructure Fund
- Total Net Assets: 1.2 Billion
- Expense ratio: 1.04%
- Common Share Expense Ratio: 1.68%
- Discount to NAV: -13.32%
- Distribution rate: 6.28% (quarterly dividends)
- Leverage: 37%
- Turnover Ratio: 113% (annualized)
Full Disclosure: Long UTF.