Investec Wealth & Investment (IWI), which has £20.1 billion (€23.8 billion; $30.6 billion) of client money under management, has revealed that it has increased its exposure to infrastructure funds by £60 million over the last two years and by £40 million over the last year alone.
The firm believes that infrastructure offers solid performance and income, while government bond yields and base rates remain at rock bottom.
It said that, in the past nine months, it has invested in new share issues launched by four UK listed infrastructure funds: GCP Infrastructure (GCP), International Public Partnerships (INPP), John Laing Infrastructure Fund (JLIF) and HICL Infrastructure (HICL). It first invested in HICL in 2006 and is one of the firm’s three largest shareholders.
IWI pointed out that the four funds all delivered total returns of between 13 percent and 16 percent for the 12 months to 31 March this year, compared with 15 percent for the FTSE 100. But the share price volatility of the listed infrastructure funds was 40 percent less than the FTSE 100.
The market value of listed infrastructure funds on the London Stock Exchange has risen from £1.4 billion to £4.9 billion since the end of 2008 as more funds have gained listings and existing funds have raised fresh capital. IWI thinks this acceleration is likely to continue.
“Infrastructure is providing a welcome source of income for many investors and we expect the sector to continue to perform solidly over 2013,” said Chris Hills, chief investment officer at IWI, in a statement. “However, investors are likely to be better off by investing in a secondary issue at close to net asset value rather than buying existing shares in the market at a premium.”
Part of the Investec Group, IWI offers its fund management services to private individuals, charities, trusts, international clients and financial advisers.