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Infrastructure, Investments

Unlisted infrastructure fund gains SMSF flows

The lower entry point for a diversified unlisted infrastructure offering has captured increased attention from SMSF investors, as many begin to diversify their portfolios into the asset class, Infrastructure Partners Investment Fund Management (IPIFM) has said.

“SMSFs are looking for yield and they’re also looking for capital growth – unlisted infrastructure can provide that and it has historically provided that [for larger super funds],” IPIFM executive director Nicole Connelly told a media briefing in Sydney today.

“But SMSFs have not had the same access to certain products as the big funds have – historically, you needed anywhere from $5 million to $25 million to access unlisted infrastructure.”

The IPIF Core fund was created in early 2015 in response to initial demand from smaller investors – SMSFs, high net worth individuals and smaller institutional investors – to benefit from the mix of income, capital growth and stability that infrastructure assets can provide, in a low cost structure.

It now has more than $118 million in funds under management and has delivered returns of 9 per cent per annum since inception in January 2016.

Connelly said over 55 per cent of the fund’s investor base is comprised of SMSF investors.

“Our minimum investment is $50,000 and we actually reduced it, based on the advice of the SMSF Association to take into account the average fund size, and since we’ve done that we’ve had more inflows from SMSFs,” she revealed.

“Typically, most SMSF trustees invest 5 per cent to 10 per cent into unlisted infrastructure.”

Unlisted infrastructure investments account for between 7 per cent and 12 per cent of major institutional investor portfolios.

“Infrastructure’s potential for stable, reliable income and capital growth is derived from long term, stable and predictable cash flows, typically underpinned by long term contracts or a regulated asset base, with high visibility of income and revenues often linked to inflation,” Connelly said.

Mounting uncertainty surrounding the outlook for the global economy and investment markets is also highlighting the benefits of holding defensive assets, such as infrastructure, in a portfolio, she added.

“Infrastructure assets provide essential services such as gas, water, electricity transmission and distribution networks, as well as transport infrastructure including airport, rail and road tolls,” she explained.

“These assets are considered to be defensive as they provide reliable income, as the prices they charge are often regulated by governments and their cash flows are predictable.”

The IPIF Core fund provides monthly pricing and pays out distributions semi-annually.

It will achieve its three-year track record in January.

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