NEW YORK (Reuters) – At a time when U.S. utilities face pressure to rely more on renewable energy, a well-known investor in the space said it is equally important to judge companies by their spending on less glamorous areas like power lines and grid reliability. Kera Van Valen, managing director and portfolio manager at Epoch Investment Partners, said on Tuesday that she finds companies including Ameren Corp and WEC Energy Group Inc appealing because of their infrastructure spending. Those companies – and their regulators – understand that “you’re going to need to connect more and more to the alternative energy sources and you need that distribution network to be able to do so,” Van Valen said at the Reuters Global Investment Outlook 2020 Summit in New York. She said she had avoided holding California utilities, notably the now-bankrupt PG&E Corp, on concerns that state officials were not focused enough on areas like grid reliability. “We didn’t feel the state regulator was as constructive as some of the other states within the U.S.,” she said. Van Valen is a portfolio manager for Epoch’s equity shareholder yield strategies focused on areas like companies’ dividends and buybacks. Epoch managed $33.1 billion for clients as of Sept. 30. (For other news from the Reuters Global Investment Outlook 2020 Summit, click here) Van Valen has been a long-standing holder of leading cigarette maker Altria Group Inc, with a stake accounting for about 1% of her portfolio. She defended the holding despite scrutiny of smokeless tobacco technologies and public health concerns. She said Altria and rivals have “tremendous pricing power.” Even if sales volumes decline, “the pricing does allow for the company to generate growth and strong cash flows.” Recent regulatory attention to vaping could ultimately benefit large tobacco companies, she said, given much of the concern stems from products made by smaller companies or illicit use. “Everybody wants to see this regulation come through. It actually could be quite beneficial to the large tobacco companies,” she said. Van Valen said about 5% to 10% of her strategies’ investors currently ask for a few holdings to be stripped out because of environmental, social or governance (ESG) issues. Despite her holdings in industries like tobacco, her portfolios still rate highly on some ESG metrics because they include many companies that are tightly overseen. “The reason we’re more comfortable with them is they’re following the regulations,” she said.