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July 26, 2022

Infrastructure Income Investing: Hard Assets for Hard Times

In their July 26, 2022, webcast, Andrew Hsu and Damien Contes, portfolio managers of the DoubleLine Infrastructure Income Strategy, explain (5:42) the resilience of infrastructure investments in challenging economic environments. Mr. Hsu presents four challenges (1:42) confronting the world with how they play to the strengths of infrastructure investments: geopolitical tensions driving demand for infrastructure to secure energy, food and data safety; inflation benefiting infrastructure for the production of commodities; recession posing less of a threat to investments in the space given inelastic demand for, and state support of, infrastructure projects; and climate concerns continuing to pave the way for infrastructure projects needed for the transition to sustainable sources of energy.

Turning to the state of markets addressed by infrastructure, Mr. Hsu notes that given China’s economy having been idle due to COVID-19-related lockdowns (7:11), U.S. liquified natural gas (LNG) exports have shifted to other destinations, notably Europe, whose Russian natural gas imports have been curbed by Moscow. This will drive investment in LNG infrastructure. On the matter of seaborne freight (8:47), Mr. Hsu points out that “port congestion is worse now than during COVID-19” global lockdowns. Higher lease rates and utilization rates are being passed on to consumers and will drive infrastructure investment needed to accommodate rising volumes of sea freight. Likewise in aviation (11:00), Mr. Hsu says that passenger airline revenues have bounced back strongly from the lows of 2020, and “cargo revenues are starting to steadily increase.” Even in the face of higher airline prices, demand has been up and inelastic. While sustainable energy investment commonly is viewed through an environmental lens, Mr. Hsu notes that renewables now are coming into focus as a future contributor to national security (11:24). Supporting this trend, he says, have been advances in technology “making renewable energy more efficient and even cheaper to produce.”

• This material contains the opinions of the manager as of the date it was recorded and such opinions are subject to change without notice.

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About the Presenters

About the Presenters

  • Jeffrey Gundlach

    Jeffrey Gundlach

    Mr. Gundlach is CEO of DoubleLine.  In 2011, he appeared on the cover of Barron's as "The New Bond King."  In 2013, Institutional Investor named him "Money Manager of the Year."  In 2012, 2015 and 2016, he was named one of "The Fifty Most Influential" in Bloomberg Markets.  In 2017, he was inducted into the FIASI Fixed Income Hall of Fame.  Mr. Gundlach is a summa cum laude graduate of Dartmouth College, with degrees in Mathematics and Philosophy.

  • Andrew Hsu, CFA

    Structured Products - ABS & Infrastructure

    Andrew Hsu, CFA

    Structured Products - ABS & Infrastructure

    Mr. Hsu joined DoubleLine at its inception in 2009. He is a Portfolio Manager for the DoubleLine Total Return and ABS/Infrastructure Income strategies. Mr. Hsu is a permanent member of the Fixed Income Asset Allocation and Structured Products committees. Prior to that, he was responsible for analysis and trading of structured products, where his focus included residential MBS and ABS transactions. Mr. Hsu’s responsibilities have also included structuring and negotiating terms on new-issue transactions and forming strategic partnerships with issuing entities in order to participate in key transactions. Prior to DoubleLine, he worked at TCW from 2002, where he focused on credit analysis for structured product securities and co-managed two structured product funds centered on debt and equity investments. During that time, Mr. Hsu was actively involved with portfolio management decisions and investment analysis, including reverse engineering complex CDO/CLO structures. He holds a BS in Finance from the University of Southern California and is a CFA® charterholder.

  • Damien Contes, CFA

    Structured Products/ABS/Infrastructure

    Damien Contes, CFA

    Structured Products/ABS/Infrastructure

    Mr. Contes joined DoubleLine in 2013. He is a Portfolio Manager on the Global Infrastructure Investments team. Previously, Mr. Contes’ responsibilities included coverage of the following infrastructure sectors for the Emerging Markets Fixed Income group: transportation, oil & gas, petrochemical. Prior to DoubleLine, he spent six years with ICE Canyon, LLC where he served as a Corporate Research Analyst. At ICE Canyon, his credit work contributed to the investment management of the firm’s three types of Emerging Markets and global vehicles: hedge fund (absolute return), index products (relative value) and collateralized loan obligations (CLOs). Mr. Contes’ investment experience includes a variety of instruments, such as global leveraged loans, high yield bonds, distressed opportunities, credit default swaps, structured products and privately negotiated custom credit instruments. Previous to ICE Canyon, he was a Senior Bank Debt Specialist with Canyon Capital Advisors, where he was responsible for the settlement of foreign and distressed bank debt transactions. Prior to that, he was a Senior Fund Accountant with Mellon Financial Corporation, overseeing Emerging Markets Real Estate funds and Oil & Gas Debt and Royalty funds. Mr. Contes holds a BS in Business Administration with a concentration in Accounting & Finance from the College of Charleston in Charleston, South Carolina. He is a CFA® charterholder.