JLIF predicts UK Budget boost

Announcing its latest results, JLIF thinks changes to pension rules could provide a fresh injection of capital for the UK listed infra space.

John Laing Infrastructure Fund (JLIF), the UK-listed infrastructure fund, could stand to benefit from pension and savings changes announced in last week’s UK Budget, according to its two co-heads.

The Budget gave more freedom to holders of pension policies, essentially allowing them to spend their accumulated pension pots however they like on reaching retirement rather than having to buy an annuity.

“If you’re not going to buy an annuity, what are you going to buy?” asked David Marshall, a fund manager at JLIF, in conversation with Infrastructure Investor. “With six percent yield and steady performance, a fund like ours is perfect.”

Fellow fund manager Andrew Charlesworth pointed out that changes to the savings regime – with a tripling of the amount that can be invested in tax-free Individual Savings Accounts (ISAs) – could also increase the quantum of capital invested in listed infrastructure.

“People will want to invest in long-term, steady and stable, government-backed, inflation-linked assets – and we sit squarely in the middle of that,” he said.

JLIF was today announcing its preliminary annual results to 31 December 2013. The fund’s net asset value (NAV) increased more than 50 percent during the year to £818.1 million (€979.5 million; $1.4 billion). It raised fresh equity during the period of £282.2 million.

The fund’s total shareholder return, including dividends paid, was 13.5 percent for the year. Describing that as an “extraordinary” outcome, Charlesworth said the fund had delivered a total return of just less than 33 percent since launch – equating to more than 10 percent annually.

The fund, which invests in low-risk operational public-private partnership (PPP) projects, has a long-term internal rate of return (IRR) target of between 7 and 8 percent.