Thursday, May 22, 2008

Challenger Infrastructure Fund Update

The Challenger Infrastructure Fund announced that it sold its interests in Arqiva - a British provider of broadcasting infrastructure - and as a result is now debt free. Distributions will be paid from cash flow, rather than partly from debt. The paying distributions from debt model disturbed me a couple of years back - I reduced my position at the time but was willing to give the fund some benefit of the doubt. Since then, I've come to realise that this has been a common strategy amongst these Australian infrastructure funds and CIF is one of the least egregrious examples. On the other hand, the takeover offer from Arkmile is off for the moment.

I'm going to increase my position by 50% to a 1.8% portfolio weight.

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