According to a new study commissioned by Foresight Group, 66% of advisers expect to see clients’ allocations to global infrastructure increase over the next three years because of fear of a sustained downturn (94%), Brexit uncertainty (53%) and concern for global equity markets (47%).
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 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.
71% of advisers asserted that the most important quality infrastructure assets provide is low correlation to equity markets. Almost three quarters 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.
According to the study, almost two-thirds 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 of the respondents claimed to have a positive outlook for listed infrastructure outside the UK.
Foresight has launched a new fund which invests in global listed renewable energy and infrastructure investment companies.
Nick Scullion, Head of Foresight Capital Management and lead Fund Manager of the new global fund said: “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.”
