Advisers see role for infrastructure in personal pensions

Financial advisers expect to see more demand for UK infrastructure assets through self-invested personal pensions (Sipps) and retail funds.

Three quarters (75%) of financial advisers surveyed were bullish about the investment outlook for UK infrastructure, Foresight Group said.

Foresight, a private equity investment firm, said nearly 60% of the 206 advisers it surveyed expected to see increasing demand for Sipps and Individual Savings Accounts to house infrastructure over the next five years and the firm argued that infrastructure mitigated “four of the biggest headwinds” facing client portfolios.

These headwinds, as identified by advisers, were volatility, market correction, inflation and interest-rate rises.

Three in ten (32%) advisers were looking to increase their clients’ allocation to the asset class over the next three years, the survey found.

Foresight said UK-listed infrastructure investment companies “significantly” outperformed UK equity markets over five years to August 2017.

Using Bloomberg data, the firm – which itself invests in infrastructure – said the FTSE All Share grew 61% compared to 70% for UK-listed infrastructure investment companies.

The asset class also had significantly lower volatility (4.9% against 13.1%) over the same period.

Foresight said adviser demand was behind its plan to launch a renewable energy and infrastructure fund later this year.

Jamie Richards, partner at Foresight, said: “The global and UK energy market is undergoing a generational change, opening investment opportunities across generation, transmission and distribution technologies.

“The global decarbonisation agenda will lead to a growing reliance on renewable energy, which is becoming cheaper to produce and easier to store. Meanwhile, the retirement of existing fossil fuel plants will drive increased demand.”

©2017 funds europe

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