2018 sees record capital flows in infrastructure funds



Record capital flowed into infrastructure funds last year as sophisticated investors increased their exposure to unlisted assets in a bid for more consistent returns, according to Infrastructure Partners Investment Funds Management (IPIFM).
Investors allocated US$85 billion to unlisted infrastructure last year, up $10 billion on 2017, as investors sought the asset class’ diversification, inflation-hedging and income stream potential.
If last year was large, financial data provider, Preqin, predicted 2019 would be another huge year for infrastructure, and forecasted the amount invested in unlisted infrastructure funds to rise a further 10 per cent.
Nicole Connolly, executive director of IPIFM, said while Australia’s larger industry superannuation funds have invested in unlisted infrastructure since the mid-1990s, the nation’s smaller institutional investors, high net-worth individuals, and close to 600,000 self-managed superannuation funds have traditionally been excluded from this market.
But, volatile equity markets, coupled with low interest rates and term deposits are prompting smaller investors to seek alternate alpha, and this extends to unlisted infrastructure.
“Infrastructure, and particularly unlisted infrastructure is attractive due to its typically stable, reliable returns and low correlation to equities,” she said. “Infrastructure in a portfolio sits between government bonds and equities in terms of risk return, making it an excellent portfolio diversifier.”
Recommended for you
With wealth managers and advisers having minimal capacity for fund research, a BNY report has found simple alternatives strategies from established providers are those which resonate best with that audience.
Platinum Asset Management has seen its third major client withdrawal this year, flagging a large client will redeem $580 million by November.
ETF provider BlackRock has redefined its underlying investment strategy for the iShares Future Tech Innovators ETF and almost halved the management fees as it continues its local iShares product suite review.
Natixis affiliate IML has launched an active ETF aimed at retirees and income-focused investors, while Loftus Peak has unveiled a hedged version of its Global Disruption ETF.