This column was originally published on RealMoney on Sept. 13 at 12:23 p.m. EST. It's being republished as a bonus for readers.

You buy shares in Research in Motion or Network Appliance because they have the potential to appreciate a lot more than the market. But owning Research in Motion also means knowing you might be wrong and being forced to sell it before it goes down a lot. A diversified portfolio should include a few low-beta investments to balance out these hot potatoes.

Enter infrastructure products sold by Macquarie Bank. One of the five biggest banks in Australia, Macquarie has carved out quite a niche buying incredibly boring businesses like toll roads and parking lots and packaging them into investment products for sale to the public.

Macquarie has five funds listed in Australia, one in Canada, one in Singapore and three here in the U.S. on the NYSE. The bank also has six private infrastructure funds. The three U.S. products -- two closed-end funds and one structured as a trust -- are very similar: They provide predictable price action and large dividends.

The Macquarie Infrastructure Trust ( MIC) has investments in airport hangar rentals, de-icing services for hangar tenants, 24 airport parking lots, ground transportation around airports, water utilities and a 50% interest in a toll road in the U.K. In a slightly more interesting venture, MIC provides climate control for the Aladdin Resort and Casino in Las Vegas.

MIC's recent quarterly earnings report showed healthy growth in many segments and the trust reported EBITDA of 71 cents a share, providing nice coverage of the 50-cent dividend, which works out to a 7% yield. It also has over $4 a share in cash.

The older of the two closed-end funds is the Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund ( MFD), which has been trading since the spring of 2004. MFD is structured differently than MIC. As of May 31, 74% of MFD was invested in the common stock of high-yielding utilities, pipelines and energy companies. The fund has 36% invested in senior floating-rate loans. That's not a typo -- the fund is leveraged slightly.

MFD yields 5.7% and trades at an 8% discount to its NAV.

One caveat with MFD is the floating-rate loan aspect of the fund. Many income-oriented investors like floating-rate funds because these funds should be insulated from rising interest rates. This is because the rates on the money lent by the funds can go up. While that may be true, it isn't always reflected in the prices of floating-rate funds -- in fact, we can see that in February and March, rates went up and floating-rate funds, including MFD, went down.

Surprisingly Sensitive
While floating-rate funds should be insulated from interest-rate shifts, in February and March, when rates went up (represented here by TNX, 10-year Treasuries yield options), MFD and other floating-rate funds fell.
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The newest Macquarie investment product is the Macquarie Global Infrastructure Total Return Fund ( MGU). MGU was priced just last month and there is very little information available about it. New closed-end funds are typically issued at a premium to NAV that often gets worked off slowly in the market. MGU still has a 4.8% premium. While it is unknown whether MGU will come to have an 8% discount like MFD, some deterioration of the premium would make sense.

MGU is targeted to have a yield between 6% and 6.3% starting in late November. It will have a heavier weighting to individual stocks than MFD. This means that the fund is likely to be less rate-sensitive than MFD, but I would wait a while before buying MGU to learn more about how the fund is constructed and how it reacts to different market stimuli.

I believe in the concept that Macquarie has developed. For now, I view MIC as the best way of the three to capture the low-beta, high-yield effect because MIC has proven itself to be less interest rate-sensitive.

MIC has been less prone to big drops caused by spikes in interest rates.
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The chart comparing MIC and MFD shows that while there is a correlation, MIC has in fact been less prone to big, sudden drops caused by spikes in interest rates.

I don't expect MIC to outperform an up market -- not even close. The role that MIC plays is to provide some yield and to offset the volatility in a name I would expect to outperform an up market. If MIC can continue to do this with relatively low sensitivity to interest rates, all the better.

There is one other aspect I find interesting about the Macquarie story. The bank has expressed interest in bidding for the London Stock Exchange, which has been on the block for a while. It's likely that if Macquarie's bid is successful, the LSE will end up in an existing fund or in a new one. The stock exchange business is likely to go through some evolutionary changes, and Macquarie looks like it wants to be involved. Even if nothing materializes with the LSE, I view it as positive that the bank is proactively seeking new types of investments.

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At the time of publication, Nusbaum was long MIC, although positions may change at any time.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, Ariz., and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback; click here to send him an email.