Large to medium sized funds are increasingly ordering tailored infrastructure portfolios that can be skewed for characteristics such as growth, inflation protection and liquidity.
The trend, which is being seen by AMP Capital, is also being encouraged by APRA regulation which calls on trustees to demonstrate they have chosen investments to meet their specific risk profile.
According to Chris Wade, head of customised accounts at AMP Capital, the move has evolved from a smarter appreciation of how infrastructure can work, particularly since the GFC.
“Rather than putting an allocation of a fund and letting the manager allocate, funds are now more hands on and more active in implementation,” he said.
“Post-GFC funds understand infrastructure a lot more. That has informed investors about what the asset class is and is not. Subsequently, we have seen a greater focus from funds on dynamic asset allocation, control and liquidity.”
Wade saw the trend develop among funds of $10-$15 billion, that were looking to diversify away from a domestic bias in infrastructure assets.
From a fund manager perspective, he admitted the trend to offer such a sophisticated customised portfolio was in part a reaction to a growing number of funds seeking to manage assets in-house.
Wade said portfolios of internationally diverse infrastructure could be tailored with a bias towards income, yield, risk, CPI, liquidity, growth or defensive natures set and then infrastructure being sourced to match.