Advisers focus on infrastructure in face of political and market uncertainty
25 June 2019
Ongoing political uncertainty and the threat of a sustained downturn in the financial markets has led to growing interest in infrastructure funds, a new study has revealed.
According to the study by Foresight Group, two thirds of advisers anticipate an increase in clients’ allocations to global infrastructure over the next three years, with as many as 94% of advisers expecting a sustained downturn to dominate markets.
Over half (53%) of advisers cited Brexit as having an impact on portfolios, while 47% expressed a concern for global equity markets.
Foresight Group said recent months had seen a decrease in the use of traditional alternatives such as bonds, gilts and absolute return funds, while non-traditional assets infrastructure and property were increasingly being used for their defensive qualities. Nearly three quarters (71%) of advisers said infrastructure assets’ most attractive quality is its low correlation to equity markets, while 69% said they would consider recommending a diversified infrastructure fund to clients to address concerns about market volatility.
Compared to 2017, the number of advisers predicting an increase in clients’ allocations to global infrastructure has more than doubled, when just 32% of advisers predicted it would become popular. According to the study, 64% of advisers now believe that exposure to global infrastructure assets complement UK-focused assets.
Nick Scullion, head of Foresight Capital Management, said: “This study shows how infrastructure is continuing to grow in popularity as its role as a low correlated, defensive asset class is now far better understood. There has been significant demand building among advisers for an opportunity to provide their clients with exposure to a global fund to complement our Foresight UK Infrastructure Income Fund.”
Foresight launched a global infrastructure fund at the start of June, which invests in global listed renewable energy and infrastructure investment companies.
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