How to invest in wind farms, motorways and mobile phone masts
Financial Times
23-05-19 10:19
UK savers can now invest in the first long-term asset funds (LTAFs) following over six years of research by the UK government and the financial regulator on pension fund diversification into illiquid assets such as roads, bridges, airports, and private equity. With stock market volatility, advocates for the infrastructure sector believe it is a potential alternative to equities offering an inflation hedge, low volatility, higher dividend yields based on inflation-linked revenue streams, and defensive capabilities. The LTAF's launch suggests it is time to invest in infrastructure. Infrastructure investment covers water, energy, roads, airports, education, border security, healthcare, and communication systems. Investments in schools, hospitals, and renewable energy generators can be considered lower risk than assets exposed to the economic cycle, says Gravis' Head of Energy and Infrastructure Ed Simpson. There is also potential to align the sector with environmental, social, and economic considerations, with key types of infrastructure playing a central role in building a greener future. The bullish infrastructure sector is looking to align with Biden's $1.2tn infrastructure law and the EU's Global Gateway investment programme. However, there are also uncertainties and risks associated with these assets; governments can be guided more by politics than economics, fall out with private partners, and change policies with elections.