Allocations to infrastructure funds set to soar

• 62% of advisers predict increased allocations to infrastructure as portfolio de-risking gathers momentum
• 75% of advisers predict rise in number of infrastructure funds recommended to clients
• Low correlation to equities and Brexit uncertainty fuel increased appetite

London, 07 January 2019: UK infrastructure’s rapid transition from a niche to an increasingly mainstream asset class has been underlined by a new study, which reveals that over six-in-ten (62%1) financial advisers are looking to increase their clients’ allocation to infrastructure over the next three years, a dramatic increase from 32%2 last year.

The research, conducted among 200 intermediaries by Foresight Group LLP (“Foresight”), a leading independent infrastructure and private equity investment manager reveals that three-quarters (75%) expect to see more infrastructure funds recommended to clients.

The growing demand for infrastructure is one of the key themes to emerge from Foresight’s survey in which advisers identified de-risking as the biggest change they had made to clients’ portfolios over the last year. 

Well over 90% of advisers said they are increasingly concerned about a sustained downturn and increased volatility while three-quarters (75%) are worried about the impact of interest rate rises.  At an asset class level, clients’ exposure to UK equities, fixed income and global equities are causing the biggest headaches, according to advisers.  

Three-quarters (76%) of advisers said the main qualities sought through exposure to infrastructure are low correlation to equity markets, low volatility (58%) and a defensive element (55%) to their portfolios.  Over a third (37%) of IFAs cited Brexit uncertainty as another key driver behind the growing demand for infrastructure.

The study was commissioned to mark the first anniversary of the FP Foresight UK Infrastructure Income Fund (“FIIF” or “the Fund”), which delivered a full year yield of 5.35% and dividend payments of 5.35p per unit.  Since its launch on 4th December 2017, the fund has achieved significant capital appreciation contributing to a one-year total return of 11.65% with annualised volatility of 4.6%. In the same time period, the UK All Share delivered a total return of -1.27% with annualised volatility of 11.1%. 

 

Mark Brennan,  Lead Fund Manager, said: “Continuing market volatility and clients’ overexposure to traditional asset classes such as equities and fixed income have given rise to a dramatic shift in sentiment towards infrastructure. 

“With an increasing number of infrastructure funds accessible to retail investors entering the market, the opportunity is there for advisers to diversify client portfolios into an asset class that not only produces stable and predictable returns but mitigates many of the threats looming into view.

“FIIF’s performance over the past year amply demonstrates how high-quality infrastructure and renewable assets can deliver predictable income with low volatility, uncorrelated to traditional asset classes.”

 

Simon Ring, Managing Director at Ring Associates, said: “We started using Foresight Infrastructure Income Fund earlier this year as part of the lower volatility section within our portfolios. With Bond and Gilt funds being so vulnerable to interest rate rises we are always looking for alternatives. Since using the Fund we have been impressed by its resilience to the present market negativity and are now considering a greater exposure as a counter to equity volatility.”

 

ENDS

 

For more information contact:

Citigate Dewe Rogerson

Patrick Evans / Danae Quek / Patricia DeBidegain

foresight@citigatedewerogerson.com |+44 (0)207 638 9571

Ben Thompson, Foresight Group

bthompson@foresightgroup.eu | +44 (0)20 3667 8155

 

1 Research conducted online with 198 UK financial advisers in November / December 2018

2 Research conducted online with 206 UK financial advisers in September/October 2017

 

 

About Foresight Group LLP ("Foresight”):

 

Foresight is a leading independent infrastructure and private equity investment manager which has been managing investment funds on behalf of institutions and retail clients for more than 30 years.

 

Foresight has some £2.8 billion of Assets Under Management across a number of funds, including Listed Vehicles, Limited Partnerships, Enterprise Investment Schemes (EISs), Venture Capital Trusts (VCTs) and Inheritance Tax Solutions using Business Property Relief (BPR).

 

As one of Europe’s leading solar infrastructure investment teams, Foresight funds currently manage more than £2.2 billion in infrastructure assets including 80 operating PhotoVoltaic plants in the UK, Southern Europe and Australia, with a generating capacity of more than 1.1GW.

 

In Bioenergy, Foresight has mobilized £1 billion of capital investment into more than 40 investments in waste to energy projects, which when fully operational will have a waste processing capacity of 2 million tonnes per annum, diverting some 1 million tonnes of waste from landfill every year and generating 154MW of clean energy, saving 750,000 tonnes of CO2 emissions every year.

 

Foresight Group is headquartered in London, with international offices in Rome, Seoul and Sydney and regional UK offices in Nottingham, Manchester, Leicester, Milton Keynes and Guernsey.

 

www.foresightgroup.eu   

 

Important Information

This announcement has been issued and approved by Foresight Group LLP, which is authorised and regulated by the Financial Conduct Authority.

The value of an investment in the Fund, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Past performance is not a reliable indicator of future results. Investors must be prepared to accept fluctuations in the capital value of their investment, including possible capital loss and the risks of investing in equity markets. There are a number of other risks connected to an investment in the Fund, including (but not limited to) counterparty risk, liquidity risk and volatility. These risks are explained in the Fund Prospectus. We recommend investors seek professional advice before deciding to invest.