Probitas: wall of capital drives appetite for value-added funds

Too much money entering the market is now the number one investor concern, according to the San Francisco-based placement agent. We bring you seven slides showing the rise of value-added funds.

More than two-thirds of institutional investors that responded to a survey conducted by San Francisco-based placement agent Probitas Partners said their greatest fear about infrastructure is the amount of money trying to enter the sector. This helps explains some of the survey’s findings, which show more investors are seeking value-added exposure to chase more attractive returns.

Here are more highlights from the survey:

  • The majority, 79 percent, of respondents are insurance companies, consultants, funds of funds and public pension plans. Half of those surveyed are based in the US, 17 percent are from Europe and 22 percent are from Asia.
  • The drive towards value-added funds is accompanied by a broader acceptance of what returns investors can expect, with 67 percent saying between 12.5 percent and 15 percent is normal.
  • The terms for these funds are becoming standard as well. Eighty-nine percent of respondents said management fees between 1 percent and 1.5 percent are acceptable for such funds.