Lippens, senior investment manager of the Pictet High Dividend Selection fund, which invests in public infrastructure services said companies in these areas offer investors a stable business structure enabling a solid cash flow generation.
He also pointed out that a high and growing dividend income is a source of stable investment return.
"Pay out is usually 65-70 per cent of cash flow as opposed to some companies who pay out 100 per cent. Therefore there is always a buffer to pay the dividend, hence why we chose to invest in this sector," he explained
"An analysis of the data for the past 15 years reveals that around half of total return in equity investment comes from dividends. Therefore, a high dividend yield significantly lowers the overall volatility of the total return."
Lippens said a company with a high yield often leads to a higher return on equity. Looking back over the last 100 years, he said there had been periods where markets acted differently but yet said high yielding companies were always the best performers.
"The dividend is where you look to start, the highest driver of return should be the dividend and half of the return is usually driven by this," said Lippens.
He also pointed to inflation protection as another benefit of investing in a high yield fund and said high and growing dividends offer inflation protection. Giving an example of this, Lippens referred to US Utility, Southern Co.
"US Utility has paid a quarterly dividend since 1948 and has grown this dividend. As a result the dividend has gone up more than inflation protecting their investors against this," he said. The Pictet High Dividend Seletion fund, which is now available to UK retail investors, looks to invest in sectors such as Utilities, Telecoms, Energy Infrastructure, Waste Management and Transportation.
The fund has a strict investment process and only looks at listed equities with a minimum dividend yield of three per cent. Commenting on the countries where he is seeing the most opportunities for infrastructure at the moment, Lippens pointed to the US which has the largest weighting in his portfolio.
"We have a preference for regulated utilities and there are more regulated utilities in the US," he explained.
"The need and demand for infrastructure is growing in both developed and emerging markets. Emerging markets are probably going to grow faster than developed markets because there is more demand there."
Despite this Lippens says the strict investment process regarding the minimum dividend means they cannot invest more in emerging markets at them moment despite wanting to. "There is slightly better growth in emerging markets but we will not compromise on the yield as that's what we are in it for not for the economic growth," he said.
"We would like to own more emerging markets, the reason we do not is because of the high yield requirement. Emerging markets are not at this stage yet but they are growing quickly and we expect our weighting to increase to 15 per cent in one years time."
Looking forward Lippens remains bullish on the future of infrastructure and high yield funds. "Valuation is good at the moment and dividend yields are high compared to bond yields. They have a positive yield spread to bonds which is a precursor for outperformance," he said.
Data from Financial Express showed there are four IMA UT and OEIC defined infrastructure funds, the performance of these can be seen in the chart below:
Performance of infrastructure funds over 1-yr
Source: Financial Express Analytics
Graham Toone, head of investment research at AFH Wealth Management said he was very interested in the fund and wished there were more like it.
"We are very much interested in funds that invest on a global sector basis and fortunately companies like Pictet provide such funds, we wish that they were more like Pictet. This latest fund is certainly one we will be looking very closely at. As there tends to be high barriers to entry for this sector, utilities have predictable, stable cash flows that provide good levels of dividends that, to some extent, help to stabilise volatility."