Foresight Group LLP has launched the FP Foresight Global Real Infrastructure Fund, targeting investors aiming to bring stability to their portfolios and looking for sustainable investment opportunities.
The fund has received FCA regulatory approval. It will be actively managed, with the intention of delivering a return of more than three percent per annum above the rate of UK inflation.
The fund’s model portfolio has consistently outperformed both UK and global equity markets over the past five years, delivering higher returns, paired with lower volatility than the FTSE All Share Index and the FTSE All World Index, which Foresight attributes to the company's focus on real infrastructure.
Real infrastructure is defined by Foresight as companies that own and utilise real assets with long-term, inflation-linked contracts attached, rather than cyclical equity infrastructure companies that are merely active in the broader environment without true infrastructure characteristics.
The independent infrastructure and private equity investment manager will use the fund to invest directly into publicly listed companies that own and operate real infrastructure and renewable energy assets worldwide.
It hopes that the newly launched fund that will build on the success of the FP Foresight UK Infrastructure Income Fund, which reached its first anniversary in December 2018, and delivered a full year yield of 5.35 percent.
The fund will invest in a diverse portfolio with stable, predictable demand. This includes companies that own assets ranging from solar power and geothermal generation plants to medical office buildings and storage facilities that have strong public sector counterparties. These listed companies have a combined market capitalisation of £180 billion, and have grown in number by 259 percent since 2010.
In total the fund will draw from 91 listed renewable and infrastructure investment companies selected from a global pool of 5,700 companies.
A key factor in the investment team’s stock selection process is sustainability. The fund will invest only in the shares of companies that the team believes deliver a net social or environmental benefit and which comply with the ten principles of the United Nations Global Compact for business.
Nick Scullion, head of Foresight Capital Management and lead fund manager of the new global fund explained its strategy in a statement.
He said: “The fund invests exclusively in the shares of companies that own and operate physical infrastructure assets and contracts that typically benefit from long-dated, index-linked, government backed cash flows that have historically shown low volatility and low correlation to equity markets."
Before launching the fund, Foresight completed research with 144 advisers that revealed there was a consistent appetite for global infrastructure amidst fears of a sustained downturn, Brexit uncertainty and market volatility. Approximately 80 percent of advisers now expect to see more global infrastructure funds recommended to clients as the asset class continues to become more mainstream. Meanwhile, nearly two-thirds of advisers expect to see clients’ allocations to global infrastructure increase over the next three years. This is more than double the number since 2017, when only 32 percent of advisers predicted it would become more popular.
Mr Scullion emphasised the importance of the global nature of the fund and the stability he believed it could offer investors.
He said: "The global approach provides access to assets in geographies that benefit from these attractive characteristics while providing diversification across asset type, regulation and sovereign risk, and currencies from multiple developed markets. The fund is designed to act as a shock absorber to bring stability to portfolios during a period of anticipated volatility.”
Foresight is an infrastructure and private equity investment manager that has been managing investment funds on behalf of institutions and clients for more than 35 years. Currently, it has approximately £2.9 billion of assets under management.
