Three quarters (75 percent) of financial advisers are bullish about the investment outlook for UK infrastructure assets and the majority (59 percent) expect to see increasing demand amongst clients for exposure to the sector through SIPPs and ISAs over the next five years, according to independent infrastructure and private equity manager Foresight Group
The research, conducted among 206 financial advisers, shows that infrastructure is poised to become an increasingly popular asset class for investors as it mitigates four of the biggest headwinds facing client portfolios. These were identified as volatility by more than half (56 percent) of advisers, a market correction (49 percent); inflation (42 percent) and interest rate rises (28 percent).
Three in ten (32 percent) advisers are looking to increase their clients’ allocation to the asset class over the next three years.
Foresight’s analysis reveals that UK Listed Infrastructure investment companies outperformed UK equity markets over five years to August 2017. The FTSE All Share grew 61 percent compared to 70 percent for UK Listed Infrastructure investment companies while also experiencing lower volatility (4.9 percent against 13.1 percent) over the same period.
In response, Foresight is launching an income fund targeting UK infrastructure later in 2017. The fund will invest in UK listed renewable energy and infrastructure investment company equities and bonds.
Foresight noted that the UK has seen "unprecedented growth" in renewable energy and infrastructure investment over the last five years. In the next eight years, the UK is predicted to experience a 27 percent annual increase in cumulative renewable energy generation.
Jamie Richards, partner at Foresight, commented: “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.
“At Foresight, we have a specialist focus on energy infrastructure combined with a tradition of innovation in creating investment solutions that respond to investors’ needs. We manage funds for more than 22,000 private investors and for some of the world’s leading financial institutions. We’re excited to be launching an infrastructure income fund later in the year.”