New research commissioned by TIME Investments shows that 42% (of the advisers’ surveyed) said their clients are now investing in infrastructure such as renewable energy, utilities, transport and logistics and social infrastructure.
Nathan Sweeney, senior investment manager at Architas, says: “Examples of infrastructure assets or ‘real assets’ include wind farms and road-building projects. They’re low-risk investments because they are relied on by the population even in times of economic weakness. Infrastructure assets are often backed by governments and deliver a predictable income without the ups and downs of share price movements.”
Research further reveals that over the past twelve months a third (34%) have seen their clients increase their exposure in this area, 40% said it has not changed, and just 26% said it had fallen. Almost two thirds (60%) of advisers are predicting an increase in investing in infrastructure related assets this year.
“Investors are increasingly turning to infrastructure investments which offer attractive risk-adjusted returns versus equities and fixed income investments. The government’s commitment to infrastructure spend will also make the sector even more attractive.”
When asked to identify the most important driver for the diversification into infrastructure, 22% of advisers said it is investor concerns over ongoing economic uncertainty, followed by concerns over the Brexit deal (14%), on-going stock market volatility (10%), poor returns from bonds (10%) and a desire for predictable income (10%).
In order of importance, advisers identified the following benefits of infrastructure investments for investors: 20% said the attractive risk-adjusted returns are the most important, followed by capital growth and lower volatility (14%), predictable income generation (12%) and inflation and interest rate protection (10%).
The research findings also showed that half of advisers believe that investors are more likely to invest in UK infrastructure, compared to 28% in global infrastructure.
Stephen Daniels, manager of the TIME:UK Infrastructure Income fund, says: “Investors are increasingly turning to infrastructure investments which offer attractive risk-adjusted returns versus equities and fixed income investments. The government’s commitment to infrastructure spend will also make the sector even more attractive.”