Infrastructure CPD course 

Guide to investing in infrastructure

  • To understand what is driving investor interest in infrastructure and how the sector is expected to grow.
  • To learn how to get exposure to infrastructure as an asset class.
  • To comprehend the advantages and opportunities offered by the asset class.
CPD
60min
Guide to investing in infrastructure

Introduction

Most of us know what infrastructure is, or at least think we do.

The building of roads and transport links, such as Crossrail in the UK, are often high profile infrastructure developments, while schools, prisons and hospitals are all vital to a developed country’s infrastructure.

But perhaps many advisers and their clients do not realise the asset class can be an investment opportunity and the role it could play as part of a diversified mix of portfolio investments.

Simon Moore, senior investment manager at Seven Investment Management, acknowledges: “Infrastructure can mean different things to different people, but most definitions have a common thread at their core: exposure to a predictable and relatively secure stream of cashflows over the long-term, generally backed by public sector counterparties or regulated market positions, and often with a high degree of inflation linking. 

“That sort of cashflow profile can be very appealing to investors.”

Investors may have more commonly associated alternative asset classes like infrastructure with institutional investments.

But there are now a range of vehicles offering exposure to infrastructure aimed at UK retail investors, whether those are open-ended funds or investment trusts.

Peter Meany, portfolio manager, First State Global Listed Infrastructure fund, confirms: “Most recently, listed infrastructure has formed part of the real assets segment of investors’ portfolios, due to the nature of its long-life, hard assets and ability to provide insulation from the effects of inflation.” 

He adds: “Investors have also utilised listed infrastructure as a diversified, liquid and lower-fee alternative or complement to unlisted infrastructure allocations.”

This guide aims to explain what is generating investor interest in infrastructure and the growth path for the sector in coming years. It will also set out how advisers’ clients can get exposure, and what advantages the sector offers to both growth and income investors.

Contributors to this guide: Gavin Haynes, managing director at Whitechurch Securities; Nick Langley, co-chief executive officer and co-chief investment officer at RARE Infrastructure, a Legg Mason affiliate; Simon Moore, senior investment manager at Seven Investment Management; Adam Burniston, model portfolio manager at Thesis Asset Management; William Argent, Gravis Capital Management, fund adviser to the VT UK Infrastructure Income fund; Peter Meany, portfolio manager, First State Global Listed Infrastructure fund; Alex Scott, deputy chief investment officer at Seven Investment Management; AIC.

eleanor.duncan@ft.com

In this guide

CPD
60min
  1. Mr Scott says there is clear appeal in the cashflow profile of infrastructure assets, listing three reasons. Which is not one of the reasons?

  2. Mr Argent points out many investors view infrastructure as a viable alternative to investing in which other asset class?

  3. According to Mr Argent, almost £300bn is set to be invested in UK infrastructure by 2021, with the initial phase of the bulk of investment going into which sectors?

  4. Mr Haynes says of investment trusts investing in infrastructure, such has been the demand for the asset class, these trusts are largely trading on significant premiums which is why we are not investing in these vehicles at present. True or false?

  5. The diversification benefit of infrastructure increases when, according to Mr Langley?

  6. One set of calculations by an economic thinktank estimates the global stock of infrastructure will double to more than what over how long?

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