“As such these do not immediately benefit from the promise (or reality) of additional infrastructure spend which is steered towards materials and construction plays.”
Getting the right exposure
Mr Scott emphasises it is important to establish exactly what part of the infrastructure project a fund or investment trust is invested in, and the type of exposure the adviser’s client wants.
“Government spending on infrastructure projects may mean higher spending on capital goods, construction contractors and employment in relevant industries,” he points out.
“The building of infrastructure assets is not necessarily a theme we’d look to invest in directly to any significant degree, although some of our infrastructure funds may be involved in providing capital at the early construction phase of new infrastructure assets.
“However, where we see opportunities to invest in owning infrastructure assets, generating a steady stream of cashflow, this can be a good fit for portfolios.”
For Mr Edwardson: “The certainty of contractually-backed income streams, a high initial yield and a low correlation with other asset classes means infrastructure funds with operational assets remain an attractive investment.
“They will not suffer the vagaries of political expediency to which spending commitments are sometimes subject. As such they may be more dependable than expectations of new spend.”
eleanor.duncan@ft.com
