Allocations to global infrastructure are expected to increase over the next three years amidst widespread concern of a sustained downturn.
Nearly 100% of UK-based financial advisers fear an ongoing downturn, while just over half believe Brexit uncertainty will be a key driver to global infrastructure funds as clients seek to minimise risk in their portfolios, a study has found.
Advisers in the UK stated that global equities are a major concern within their portfolios, while UK equities are also a cause for worry.
Almost three quarters of advisers surveyed said they would consider recommending a diversified infrastructure fund to address concerns about a market correction and equity market volatility, according to the report by London-based Foresight Group LLP (Foresight).
“This study shows how infrastructure is continuing to grow in popularity as its role as a low correlated, defensive asset class is now far better understood,” said Nick Scullion, head of Foresight Capital Management.
Traditional alternatives to equities such as bonds, gilts and absolute return funds have seen a decrease in allocation in recent months.
“Whilst these asset classes are reportedly being used more infrequently, infrastructure and property are the only non-traditional assets increasingly being used for their defensive qualities; low correlation to equity markets and low volatility,” Foresight said.
Almost two thirds of respondents said that exposure to global infrastructure assets will complement UK-focused assets. This would offer investors the opportunity to access assets that are largely unavailable via UK-listed companies.
Over 50% of the 147 advisers surveyed said they have a positive outlook for listed infrastructure outside of the UK.
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