Over 60% of advisers expect to see clients’ allocations to global infrastructure increase over the next three years amidst widespread fear of a sustained downturn (94%), Brexit uncertainty (53%) and concern for global equity markets (47%).
This is according to a new study commissioned by the Foresight Group.
Advisers admitted that global equities are causing them the most concern within their portfolios whilst UK equities were also deemed to be a cause for worry.
Whats more, in recent months there has been a decrease in the use of some traditional alternatives to equities such as bonds, gilts and absolute return funds. 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.
Infrastructure investment considered an antidote to sustained downturn fears
Against a backdrop of fears over a sustained downturn, Brexit uncertainty and concern over global and UK equities, the majority of advisers (71%) asserted that the most important quality infrastructure assets provide is low correlation to equity markets. Almost three quarters (69%) 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%) whilst comparative results showed that since 2017, advisers predicting an increase in clients’ allocations to global infrastructure has more than doubled when only 32% of advisers predicted it would become popular..
According to the study, almost two-thirds (64%) 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%) 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 launched a global infrastructure fund at the start of June.