The big challenge for non-institutional investors in Australia in recent years has been working out how to get access to ‘Tier One’ unlisted infrastructure investment.
The inevitable conflict between small scale financial capacity and large scale assets has meant that most investors have largely been shut out of what is now a highly sought after asset class.
Infrastructure Partners Investment Fund - Core (IPIF Core) was recently established for the benefit of sophisticated investors, as a way to access the highest grade unlisted infrastructure assets.
IPIF Core, as the fund is called, provides exposure to an existing, diversified portfolio with mature, stable, cash generating unlisted infrastructure assets.
The main asset exposures are via UTA, an institutional infrastructure fund set up by Hastings Funds Management in 1994 which now has close to $12billion under management. From its headquarters in Melbourne, Hastings has built a global footprint with offices in Sydney, Singapore, London and New York.
Tier One infrastructure assets are one of the reasons why Industry Funds in Australia do so well on a regular basis. They have consistently allocated to this asset class and have access that most don’t.
The access to longer term investment opportunities directly align with their longer term time horizon.
Via UTA, Hastings manages an asset portfolio predominantly comprised of utilities, airports, toll roads and seaports in Australia, the UK, Europe and the US. Its primary focus is on building a diversified portfolio of equity based infrastructure investments. The Hastings team covers asset finance, business development, client services, portfolio construction, origination, and infrastructure investing.
Since inception UTA’s total return , after fees, has been 11.88 per cent a year, which surpasses the benchmark return of 9.35 per cent (as at May 2017) by a significant margin
IPIF Core was only formed in January 2016 but has returned 13.3 per cent in the intervening year, which is more than double its benchmark return of 6 per cent. The Fund has delivered 14.47% for the 12 months to May 2017.
Until now such funds as UTA could only be accessed by bigger pooled superannuation funds and specialist asset managers, but the IPIF Core structure permits High Net Worth and SMSF investors to access the asset class.
IPIF Core is an illiquid investment that should best be held for a minimum of five years, although the Fund does offer an annual window to redeem.
It reserves the right to invest in other funds in circumstances where the manager has been able to demonstrate stable historical risk-adjusted returns. The Colonial managed Global Diversified Infrastructure Fund (GDIF) was added to IPIF Core in October 2016 and provides exposure to a number of quality transport assets as well as regulated utilities.
IPF Core is careful to diversify its investments widely and across different sub-sectors of the asset class, using a bottom up process to select unlisted infrastructure funds based on assessment of those assets. The aim is to build a portfolio diversified by revenue risk profile (both regulated and contracted), by sector and by geography.
IPIF Core’s benchmark return target is the GST, calculated quarterly, plus a trustee fee of 0.1 per cent.
The minimum investment is $100,000, which is well within the diversifiable capacity of most SMSF’s given that they now average above $1 million in assets.
For further information contact Jarrod Brown.
Written by Andrew Main. Long established and objectively minded financial journalist, Andrew Main has an eye for what counts for investors.