Legg Mason affiliate RARE Infrastructure respond to rate cut
In response to the announcement by the Bank of England’s Monetary Policy Committee that it has cut interest rates to 0.25% and expanded the Quantitative Easing programme by £60bn, as well as unveiled plans to buy up to £10bn of corporate bonds, please find below comments from Legg Mason affiliate RARE Infrastructure.
Nick Langley, co-CEO & CIO at RARE Infrastructure, and manager of the Legg Mason IF RARE Global Infrastructure Income fund, which has raised over £100million[1] since launching a month ago, said:
“While the rate cut was priced in to markets, the decision to restart quantitative easing and introduce other measures to stimulate growth shows the true impact of the British electorate’s decision to leave the European Union. With data falling off a cliff in the weeks since the referendum, the Bank of England’s Monetary Policy Committee clearly felt it needed to act decisively.
“Whether the intervention is enough to revive the UK’s flagging economy remains to be seen, but for investors it does mean income is going to be harder to come by. With cash already yielding next to nothing, this latest cut will likely see rates fall even further. In such an environment, asset classes such as listed infrastructure can provide higher yields which you would struggle to find elsewhere, with the added advantage of providing protection against a likely uptick in inflation. We have witnessed increased appetite in these types of products first-hand since Brexit, with inflows of over £100million into our income fund just one month after launching.”
[1] Source: Statestreet, as at 2nd August 2016.