Six-in-ten financial advisers are looking to increase their clients’ allocation to infrastructure over the next three years, an increase from 32% last year.
So says new research from the Foresight Group, a leading independent infrastructure and private equity investment manager.
They questioned 200 intermediaries and it was further revealed that three-quarters expect to see more infrastructure funds recommended to clients.
The growing demand for infrastructure is one of the key themes to emerge from Foresight’s survey in which advisers identified de-risking as the biggest change they had made to clients’ portfolios over the last year.
Well over 90% of advisers said they are increasingly concerned about a sustained downturn and increased volatility while 75% are worried about the impact of interest rate rises. At an asset class level, clients’ exposure to UK equities, fixed income and global equities are causing the biggest headaches, according to advisers.
Some 76% of advisers said the main qualities sought through exposure to infrastructure are low correlation to equity markets, low volatility (58%) and a defensive element (55%) to their portfolios. And 37% of IFAs cited Brexit uncertainty as another key driver behind the growing demand for infrastructure.
The study was commissioned to mark the first anniversary of the FP Foresight UK Infrastructure Income Fund.
Mark Brennan, Lead Fund Manager, said: “Continuing market volatility and clients’ overexposure to traditional asset classes such as equities and fixed income have given rise to a dramatic shift in sentiment towards infrastructure. With an increasing number of infrastructure funds accessible to retail investors entering the market, the opportunity is there for advisers to diversify client portfolios into an asset class that not only produces stable and predictable returns but mitigates many of the threats looming into view.
“FIIF’s performance over the past year amply demonstrates how high-quality infrastructure and renewable assets can deliver predictable income with low volatility, uncorrelated to traditional asset classes.”