Specialty Manager of 2022: Lazard

Despite the lingering global pandemic, a continued reduction in travel and rising supply chain issues, the Lazard Global Listed Infrastructure Fund managed a return of 19.87% in 2021, beating its benchmark by more than 2 percentage points.

Yet in many ways it was due to the unwinding of the pandemic that helped Edward Keating, Lazard director and portfolio manager, and his team’s performance to excel in 2021.

Winning the Asset Manager of the Year award in the Specialty category, the first time one has been given in the category since 2017, Keating credited their typical three- to five-year investment horizon, and the rebound, especially from 2020, from the COVID shutdowns.

Because prices were depressed on many of those stocks in 2020, Lazard was able to scoop them up or add to holdings cheaply, and when the world began opening again, those prices rose.

Three key areas of 2021’s success included the railway sector, United Kingdom utilities and toll roads. As Envestnet analysts wrote, the “value-oriented portfolio [is] made up of the stocks … that exhibit high revenue and profit certainty due to their usually regulated and monopolistic market positioning and long-term, inflation-linked contracts.”

For many years Lazard had been trimming their holdings in the railroad sector, but the impact by COVID on travel logistics and shipping lanes and routes made them think differently.

“[In the third quarter] we viewed the impact on the railroad companies in an overblown manner, and saw the share prices fall double digits over the course of just a few weeks, which allowed us to [buy] or invest further capital in companies that while already attractive, became more attractive, and … those companies performed quite strongly in the fourth quarter,” Keating explained.