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New study sees shift towards global infrastructure as adviser fear sustained downturned


According to a new study commissioned by Foresight Group (Foresight), two-thirds (66 per cent) of financial advisers expect to see clients’ allocations to global infrastructure increase over the next three years amidst widespread fear of a sustained downturn (94 per cent), Brexit uncertainty (53 per cent) and concern for global equity markets (47 per cent).

Advisers indicated that global equities are causing them the most concern within their portfolios whilst UK equities were also deemed to be a cause for worry. In recent months there has been a decrease in the use of some traditional alternatives to equities such as bonds, gilts and absolute return funds1. Whilst these asset classes are reportedly being used more infrequently, infrastructure and property are the only non-traditional assets increasingly being used for their defensive qualities; low correlation to equity markets and low volatility.

Against a backdrop of fears over a sustained downturn, Brexit uncertainty and concern over global and UK equities, the majority of advisers (71 per cent) asserted that the most important quality infrastructure assets provide is low correlation to equity markets. Almost three quarters (69 per cent) would consider recommending a diversified infrastructure fund to address concerns about a market correction and equity market volatility.

The survey demonstrated an appetite for infrastructure investment funds on account of their increased availability (80 per cent) whilst comparative results showed that since 2017, advisers predicting an increase in clients’ allocations to global infrastructure has more than doubled when only 32 per cent of advisers predicted it would become popular.

According to the study, almost two-thirds (64 per cent) of advisers believe that exposure to global infrastructure assets complement UK-focused assets. For example, the opportunity to access assets that are largely unavailable via UK listed companies. A majority (57 per cent) of the respondents claimed to have a positive outlook for listed infrastructure outside the UK.

In response to increasing demand from advisers and investors, Foresight is set to launch a global infrastructure income fund in June.

The fund will build on the expertise and success of the existing FP Foresight UK Income Infrastructure Fund, which recently celebrated its first-year anniversary, delivering a full year yield of 5.35 per cent and achieving a number one ranking across total return, max drawdown and standard deviation by CityWire Selector. The new fund will invest in global listed renewable energy and infrastructure investment company equities.
Nick Scullion, Head of Foresight Capital Management and lead Fund Manager of the new global fund, says: “This study shows how infrastructure is continuing to grow in popularity as its role as a low correlated, defensive asset class is now far better understood. There has been significant demand building among advisers for an opportunity to provide their clients with exposure to a global fund to complement our award-winning UK Infrastructure Income Fund.  We look forward to launching this in June.”

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