New study predicts big shift towards global infrastructure investment

The Foresight Group have responded to “continuing Brexit uncertainty” and “widespread fear of a sustained downturn” by launching a global infrastructure fund investing in global listed renewable energy and infrastructure investment companies.

The new fund follows the findings of a new study of financial advisors, commissioned by Foresight, whose key findings included: 

• 94% of financial advisers surveyed fear the threat of a sustained downturn;
• 53% cite Brexit uncertainty as a key driver to global infrastructure funds to de-risk portfolios;
• 80% believe more advisers will recommend global infrastructure to clients against a backdrop of uncertainty;
• 66% of advisers expect to see clients’ allocations to global infrastructure rise over the next three years compared to 32% in 2017.

The study found that two-thirds of financial advisers also expect to see clients’ allocations to global infrastructure increase over the next three years amidst widespread fear of a sustained downturn, Brexit uncertainty, and concern for global equity markets.

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, the report says there has been a “decrease in the use of some traditional alternatives to equities such as bonds, gilts and absolute return funds.”

Against a backdrop of fears over a sustained downturn, Brexit uncertainty and concern over global and UK equities, the majority 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, 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 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.

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. 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 FP Foresight UK Infrastructure Income Fund. We are delighted to have launched FP Foresight Global Real Infrastructure Fund to meet this demand.”