The majority (92%) of clients with over £200,000 of investible assets now have an allocation to infrastructure, according to new research with 200 UK wealth managers, financial advisers, discretionary fund managers, fund selectors, and investment analysts from TIME Investments, which specialises in asset-backed income-producing funds.
The research reveals that, for the average client, 71% said that their current target allocation range to the asset class is between 4% and 6% of their investment portfolio. Three quarters said that they expect allocation to infrastructure assets to increase over the next 12 months and 25% expect it to stay the same.
When asked what is driving allocation to real assets such as infrastructure, the key factors cited by respondents are the desire to de-risk portfolios through diversification (68%), increased focus on ESG (61%), desire for secure income streams (45%), and defensive investment strategies (44%).
The research also highlighted the infrastructure sectors respondents felt offered the greatest investment opportunities over the next 12 months, with digital infrastructure and social infrastructure seen as offering the greatest potential by 78% and 71% of respondents respectively, followed by renewables (46%), healthcare (45%), education (38%) and transport (23%).
Andrew Gill, Co-Fund Manager of the TIME:UK Infrastructure Income Fund said: “Our research shows that asset allocations to infrastructure are set to increase over the next 12 months. This is predominantly being driven by diversification and the desire for secure income streams as investors try to weather the economic challenges.
“Economic performance can have a greater impact on different sectors depending on the make-up of their income streams. Global economic growth, including the UK and Continental Europe, is expected to be weak in 20242 and sectors that rely on persistent or growth in demand could be impacted. We have a preference for sectors that have a higher degree of ‘availability’ based revenue, effectively as long as the asset is operational, income will be received.
“Whilst political risk is elevated in a general election year, UK infrastructure looks well supported by the two main Westminster parties. UK public debt remains highly elevated and though infrastructure has been an easy target for spending cuts, such as in the early 2010s, there seems to be a greater understanding of the need for continued, well-targeted infrastructure investment.”
The TIME group manages over £1 billion of high-quality asset-backed and listed infrastructure securities across several asset types. Its dedicated in-house team of investment specialists focuses on delivering positive environmental, social, and economic benefits through investing in UK infrastructure, renewable energy, logistics, and social and digital infrastructure. TIME is part of the Alpha Real Capital Limited Group with over £4.5 billion of assets under management. Most of these assets are in defensive and secure income real asset strategies.
The value of investments and the income from them may fall as well as rise as a result of fluctuations in the market, currency or other factors and investors may not get back the original amount invested. Any past performance data cited is not a reliable indicator of future results.
