The underlying infrastructure assets (roads, schools, hospitals, solar farms, wind parks) to which the fund will be exposed are attractive for a several key reasons:
- Long term contracted revenues
- Material inflation linkage
- Low correlation to equities
- Public-sector counterparties
- Low volatility
With the prevailing low interest rates and yields from sovereign and corporate bonds at historical lows, investors have unsurprisingly found the predictable cash flows, uncorrelated and inflation-protected yields from infrastructure assets increasingly attractive. The UK has seen rapid recent growth in the number of infrastructure investment companies with more than 20 now available to investors, amounting to a combined market capitalisation of more than £17 billion.